Gold Fields shares jumped more than 21% on Wednesday, a day after Yamana Gold accepted a rival offer, which ended the SA gold producer’s months-long journey to bring the Canadian miner under its wing.
However, Gold Fields will receive a hefty $300m (R5.3bn) from Yamana as a termination fee.
The fate of the deal was thrown into doubt on Friday when precious metal companies Agnico Eagle and Pan American tabled a joint bid that valued Yamana at about $4.8bn and trumped Gold Fields’ earlier offer that valued Yamana at $6.8bn before the drop in the SA company’s share price chipped away at that valuation.
By last week, Gold Fields’ offer meant Yamana was worth about $4bn, reflecting a nearly 20% drop in the former’s share price on worries that CEO Chris Griffith was offering too much when the deal was first announced in May.
“Gold Fields is disappointed by this outcome and continues to believe that the transaction was a financially and strategically superior offer for shareholders of both Gold Fields and Yamana,” the company said in a statement.
“Nonetheless, following Yamana’s change in recommendation, Gold Fields believes the most disciplined and prudent course of action to maximise Gold Fields’ shareholder value is to terminate the arrangement. Gold Fields’ and its shareholders will now benefit from the termination fee.”
Gold Fields’ decision not to sweeten its bid for Yamana won praise from analysts and one of its biggest shareholders. They have been pressing for tighter investment budgets in the global gold mining industry, which is under pressure to look for deals in the face of rising costs.
By the JSE’s close on Tuesday, Gold Fields share price had gained the most in a day since 2008, up 21.06% to R184.50, just 3% shy of where it was when the deal was first announced on May 31 — a move that saw it tumble nearly 20% in one day.
The company now has a market valuation of R164.5bn.
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