Gold Fields won鈥檛 raise offer for Yamana Gold after rival bid
Gold Fields (JSE, NYSE: GFI) has for Yamana Gold (TSX: YR)(NYSE: AUY) after two Canadian miners teamed up last week and put an unsolicited $4.8 billion bid on the table.
The cash and stock offer from Agnico Eagle Mines (TSX, NYSE: AEM) and Pan American Silver (TSX, NASDAQ: PAAS) on Friday trumped Gold Fields鈥 bid, which valued Yamana at around $4.2 billion at Thursday’s close.
鈥淕old Fields will continue to work towards completion of the transaction on its current terms for the benefit of the shareholders of both companies in accordance with the arrangement agreement,鈥 the company said on Monday.
The South African miner added its decision reflected “commitment to capital discipline” as well as fairness for shareholders in both the company and Yamana.
It also said its offer was 鈥渟trategically and financially superior鈥 to the deal presented by Pan American and Agnico Eagle.
The statement contradicts what the two Canadian miners said in their joint press release, which stated that Yamana鈥檚 board of directors has already accepted their offer as 鈥渟uperior鈥.
Gold deal of the year
Gold Fields, which offered to buy Yamana in May, sees the proposed takeover as the gold deal of the year. It would create the world鈥檚 fourth-largest gold miner, surpassing Agnico Eagle.
The company reiterated that Yamana鈥檚 assets would create significant near-term and long-term value for the shareholders of both companies.
The deal would help Gold Fields鈥 expand in the Americas, particularly in the Southern Hemisphere.
鈥淭hat鈥檚 what the Yamana assets do, they tick all those boxes for us. They bring high quality assets in Canada, Chile and Brazil, with great pipeline projects in both Canada and Argentina in particular,鈥 Griffith .
Walking away from the deal could impact the Johannesburg-based miner鈥檚 long-term growth outlook. Gold Fields has already faced investor criticism for the 33.8% premium it offered when its $6.7 billion bid was announced.
Yamana鈥檚 website still has a announcing the Gold Fields鈥 deal. Should their agreement be terminated, the Toronto-based miner would have to pay a $300 million break fee to Gold Fields.
Yamana shareholders are scheduled to vote on the deal on November 21, while Gold Fields investors meet the next day.
“We do not believe Gold Fields is looking to acquire Yamana at all costs despite the strategic rationale,” Investec analysts wrote in a note.
If the company matches the Agnico-Pan American bid, it could risk not winning the necessary backing of 75% of its shareholders, they said.
The rival bid would see Pan American acquiring Yamana, while Agnico Eagle would hold the gold company鈥檚 Canadian assets. Pan American is offering shares to Yamana investors, while Agnico Eagle is offering shares and contributing $1 billion of cash.
The deal would make Pan American a top precious metals miner in Latin America, while Agnico Eagle would consolidate its ownership of one of the world鈥檚 biggest gold mines, the Canadian Malartic in Quebec.
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