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Gold Fields Ltd on Tuesday said it has agreed to buy Toronto-based Yamana Gold Inc in an all-share offer valued at around $6.7 billion, or R 103.8 billion.
In terms of the proposed acquisition, Yamana shareholders will receive 0.6 of a new Gold Fields share for each Yamana share held, implying a valuation of $6.7 billion.
The transaction represents a premium of 34% to the 10-day volume weighted average traded price of Yamana shares on the New York Stock Exchange of $5.20 on Friday last week, based on Gold Fields American depositary shares' 10-day average of $11.59.
US markets were closed on Monday for the Memorial Day holiday. In London on Monday, Yamana shares closed down 2.1% at 404.16 pence. Shares in Gold Fields closed 3.0% higher at R 190.80 on Monday in Johannesburg.
Yamana shareholders will receive either newly issued shares in Gold Fields, which are listed on the Johannesburg Stock Exchange, or newly issued Gold Fields' American depositary shares, which trade on the NYSE.
The Yamana board has unanimously approved the takeover and is recommending the deal to its shareholders.
The acquisition is subject to shareholder and regulatory approvals.
Yamana is a Canada-based precious metals producer with significant gold and silver production throughout the Americas, including Canada, Brazil, Chile and Argentina. Its total attributable production for twelve months ended March 31 was 1.01 million ounces.
If the acquisition succeeds, the Yamana shares will be delisted from the Toronto Stock Exchange, the NYSE and the London Stock Exchange.
Gold Fields and Yamana shareholders will own about 61% and 39% of the combined group, respectively.
Gold Fields projects the initial target pre-tax synergies of around $40 million a year, anchored in operational integration, as well as potential financing synergies and a streamlining of overhead cost structures.
The combined entity will be headquartered in Johannesburg with operations across Canada, Australia, South America, Ghana and South Africa.
‘Today we are announcing the acquisition by Gold Fields of Yamana, two companies with complementary portfolios, cultures and strategic priorities. The result is a combination with much greater capacity and potential value than the sum of its parts. Each company brings with it a unique set of skills and geological knowledge, enabling the combined group to enhance its assets over the long-term more efficiently than they could as separate companies,’ Gold Fields Chief Executive Chris Griffith said in a statement.
In a separate statement, Yamana Chief Executive Peter Marrone said the takeover delivered an immediate and compelling premium for Yamana shareholders, reflecting the inherent fair value of its assets, while also offering an opportunity to benefit from the creation of a new global gold producer with an attractive value proposition.
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