Gold Fields refuses to make new offer for Yamana, despite competing bid from Canadian miners
ca.finance.yahoo.com
Naimul Karim
Mon, November 7, 2022 at 11:00 a.m.·3 min read
South Africa’s Gold Fields Ltd. will not make a new bid to buy Toronto-based Yamana Gold Inc. after Canadian miners Agnico Eagle Mines Ltd. and Pan American Silver Corp. on Friday made a combined US$4.8-billion offer that includes stock and cash.
Yamana on Friday said the new proposal is superior to the one it inked with Gold Fields on May 31 and that the South African miner had five days to match it. But Gold Fields’ chief executive Chris Griffith said the company’s board unanimously voted not to propose a new offer.
“We continue to believe our transaction is strategically and financially superior,” he said in a press release on Monday. “We believe in the highly complementary fit of Yamana’s operating assets and its extensive pipeline of future growth projects will create significant near-term and long-term value for the shareholders.”
Gold Fields’ all-stock transaction buyout offer for Yamana was valued at roughly US$6.7 billion at the time, but the deal subsequently faced opposition from some of its largest shareholders.
Joe Foster, who manages gold investments at VanEck, which counts itself among, if not the largest, shareholder in both Yamana and Gold Fields, has said their potential combination made little sense to him.
“I don’t endorse the deal on either side,” Foster told Reuters on Oct. 27. “It’s a deal that just doesn’t make fundamental sense to me.”
The competing offer has Toronto-based Agnico contributing US$1 billion in cash and roughly 36 million of its shares, and Vancouver-based Pan American contributing roughly 153 million shares. Each Yamana share would be exchanged for US$1.04 in cash, 0.1598 Pan American shares and 0.0376 Agnico Eagle shares.
The aggregate value of their proposal is US$5.02 per Yamana share, a 23-per-cent premium to Yamana’s closing price on Nov. 3 of US$4.08.
That is less than the US$5.20 per share Gold Fields initially offered, which was a 33.8-per-cent premium to Yamana’s average share price in the 10-day period preceding the offer. But since May 27, the last day of trading before Gold Fields’ offer was announced, the South African miner’s share price has slid 30 per cent to US$8.50, from US$12.20.
If the offer by Gold Fields’ rivals goes through, Agnico is expected to acquire full ownership of the Canadian Malartic mine in Quebec, which it currently owns on a 50-50 basis with Yamana. Pan American would acquire Yamana’s other assets, mostly based in Latin America.
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Agnico on Friday said full ownership of the Canadian Malartic mine — often described as the jewel of its portfolio because it consistently produces more than 500,000 ounces of gold per year — would enable it “to monetize future additional mill capacity,” perhaps from other nearby properties. The company has several other mines and exploration properties in the Abitibi region where the mine is located.
The deal would increase Pan America’s silver production by approximately 50 per cent to 28.5 million to 30 million ounces and roughly double gold production to between 1.1 million and 1.2 million ounces, while also adding an “enlarged pipeline of potential growth projects in Latin America.”
Both Canadian miners said they would realize multiple “operational and administrative synergies” through the acquisition.
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