South Africa’s Gold Fields Limited is paying a rich premium to buy Yamana Gold Inc. in a USS6.7-billion all-share transaction that will see another of Canada’s mid-tier mining companies swallowed up by bigger prey.
In a deal announced on Tuesday, Yamana shareholders are set to receive 0.6 of a Gold Fields share, which equates to a premium of 31 per cent over its closing market value on Monday. Yamana’s board has backed the deal, and a shareholder vote will be held later in the year, with at least two thirds of votes cast needed for it to close.
Founded by former securities lawyer and investment banker Peter Marrone in 2003, Yamana’s most valuable asset is its 50 per cent stake in the Malartic mine in Quebec. Yamana also owns mines in Brazil, Chile and Argentina. Yamana, which produced 885,000 ounces of gold last year, had long been cited as a takeover target in the gold sector.
“Although we are surprised by Gold Fields as the acquirer as we previously had only North American and Australian gold producers on our radar as potential acquirers, the rationale for the deal is consistent with other gold M&A in recent years, namely achieving scale for relevance to investors, as well as geographic diversification,” Fahad Tariq, analyst with Credit Suisse wrote in a note to clients.
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