Consolidation is beginning to get underway within the gold space amongst producers. This morning it was revealed that Gold Fields (NYSE: GFI) would be acquiring that of Yamana Gold (TSX: YRI).
The transaction will see the creation of a top four global gold producer, which will be headquartered in Johannesburg, South Africa. On a combined basis, the entity is to have operations in Canada, South America, Australia, Ghana, and South Africa.
“The combination of Yamana and Gold Fields creates a world-class, globally diversified company with regional relevance across premier, rules-based mining jurisdictions that is underpinned by low cost, long life mines. The combined entity will be well positioned to deliver long-term value creation with its enhanced scale, management strength and improved capital markets profile,” said Yamana Chairman Peter Marrone.
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The proposed transaction is set to consist of all-share consideration, with Yamana shareholders to receive 0.6 shares of Gold Fields for every share held. The ratio implies a 33.8% premium to Yamana shareholders, valuing the company at US$6.7 billion. Upon close, current Yamana shareholders are to own 39% of the resulting company.
Completion of the proposed transaction is subject to shareholder and regulatory approval. If the transaction is not approved, Gold Fields is entitled to a US$300 million termination fee, while Yamana is entitled to a US$450 termination fee, dependent upon which party is forced to walk from the transaction.
The proposed agreement is currently estimated to close in the second half of 2022. The resulting issuer is expected to continue to trade on the NYSE and the JSE, while listings on the Toronto and London stock exchanges are to be removed.
Yamana Gold last traded at $6.75 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
