New suitors vie with Gold Fields for Yamana
● Gold Fields said it would work to complete the $6.7bn (about R120bn) acquisition of Canada’s Yamana Gold even as a rival bid was announced on Friday, resulting in a surge in the Gold Fields share price.
The share jumped 11.23% to close at R154.05 after Yamana announced it had received a $4.8bn joint, “superior” offer from Agnico Eagle Mines and Pan American Silver.
Agnico Eagle and Pan American said in a statement on Friday that they had offered to buy Yamana in a cash-and-stock deal valued at $5.02 a share.
The offer will see the sale of certain assets to Agnico Eagle and the acquisition of the remainder of the company by Pan American.
Yamana said Gold Fields, which made the initial offer in May, had five business days to match the new offer or propose changes to its offer.
“At this time, there can be no assurance that the new offer will lead to a termination of the Gold Fields arrangement agreement … or that the proposed transaction contemplated by the new offer will be consummated,” Yamana said.
The new offer has come two weeks ahead of a Gold Fields general meeting where shareholders are scheduled to vote on the transaction.
Gold Fields announced the proposed acquisition of Yamana at the end of May, saying it was in line with ambitions to create a top-four global gold major.
However, some shareholders have balked because the $6.7bn valuation of Yamana represents a premium of 33.8% over its share price.
In response to the new offer Gold Fields said on Friday that it believed that the terms of its agreement with Yamana were “demonstrably superior to the joint offer”.
“Gold Fields will continue to work towards the completion of the transaction for the benefit of the shareholders of both companies in accordance with the arrangement agreement,” said the company.
As part of Gold Fields’s terms, all outstanding Yamana shares would be exchanged at a ratio of 0.6 of an ordinary share in Gold Fields or 0.6 of a Gold Fields American depositary receipt share.
Gold Fields CEO Chris Griffith said the emergence of another offer was an indication that other mining companies saw the inherent value in Yamana’s assets.
“As we have always said, the complementary nature of Yamana’s assets in the Gold Fields family will create significant near-term and long-term value for all shareholders.
“As a result, it is clear that Gold Fields’s offer remains strategically and financially superior to the joint offer with lower operational and execution risk and higher sustained returns, given Gold Fields enjoys the free cash flow, balance sheet profile and technical capabilities to unlock the full potential of Yamana’s assets,” he said.
Avishkar Nagaser, Gold Fields’s executive vice-president for investor relations & corporate affairs, said the board would meet to decide on the way forward. “We will update the market in due course,” he said.
Michael Steinmann, president and CEO of Pan American, said the combination of its existing portfolio with Yamana’s high-quality assets in Latin America would create a powerful precious metals mining company with leading exposure to silver, and represented an exciting opportunity for both Yamana and Pan American shareholders.
Bloomberg said the deal was key to Gold Fields’s expansion in the Americas, as producers in South Africa are now struggling with the geological challenges of operating some of the world’s deepest mines.
“The two deals on the table are not too far off, especially considering the $300m break fee Yamana would have to pay Gold Fields,” Credit Suisse analyst Jessica Xu said in a note to clients, Bloomberg reported.