Gold Fields CEO says investors misunderstand rationale for Yamana takeover as shares swoon – by Gabriel Friedman (Financial Post – June 6, 2022)

Drop in Gold Fields stock leading analysts to question the deal

Gold Fields Ltd. chief executive Chris Griffith called his purchase of Yamana Gold Inc. the “optimum solution” to support his new business strategy. Investors aren’t so sure. Gold Fields shares dropped 23 per cent after Griffith announced his proposed $6.7 billion acquisition of Toronto-based Yamana last week, putting management on the defensive.

Griffith, who was appointed CEO of Gold Fields a year ago and has been leading mining companies since 2008, insisted that investors and analysts have failed to grasp that none of the typical reasons given for industry mergers apply to this deal.

The merger isn’t about creating synergies, as Johannesburg-based Gold Fields expects only about $40 million in annual savings. Nor is it about achieving scale to gain trading liquidity and interest from larger investors, as many analysts have suggested, Griffith said.

Rather, Griffith insisted that the purchase should be seen as a move to add to Gold Fields’ assets at a time when finding and building new mines is becoming increasingly difficult, leaving ambitious mining companies with little choice but to grow through acquisitions.

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