Northern Star Resources, Australia's largest gold miner, rejected a $27 billion takeover approach from Gold Fields on the grounds that the offer undervalued the company. Rather than dropping on the failed deal talk, as often happens when a target turns down a suitor, Northern Star shares climbed to a one-month high.
That reaction tells you what the market thinks happens next: investors are betting Gold Fields, or another bidder, comes back with a higher number rather than walking away. Gold miners have been sitting on rising cash flows this year as bullion prices have stayed elevated, giving boards like Northern Star's more confidence to hold out for a better price.
What is unresolved is whether Gold Fields returns with an improved offer or drops the pursuit entirely. Northern Star's statement gave no indication it is open to negotiating at the rejected price.