Major M&A announcement: Gold Fields to buy Yamana in $7 billion deal

South Africa’s Gold Fields has agreed to buy Canadian precious metals producer Yamana Gold, in an all-share deal worth close to US$7 billion.

Gold Fields is offering 0.6 of one of its shares for each Yamana share, which resembles a 34% premium to the 10-day volume weighted average traded price of Yamana shares on the New York Stock Exchange (NYSE) on Friday last week, based on Gold Fields American depositary shares’ 10-day average.

The deal resembles a significant piece of M&A in the gold sector, which has been characterised by consolidation in the mid and upper echelons during the last 12 months. Newcrest Mining agreed to buy Pretium Resources for $2.8 billion in November 2021, while Agnico Eagle and Kirkland Lake Gold announced a $10.7 billion merger of equals in September 2021.

After receiving unanimous approval by the Yamana board, Gold Fields will in the coming months integrate a large portfolio of gold and silver mines in Canada, Argentina, Chile and Brazil. Gold Fields said the deal fits with its strategy of expanding in ‘mining friendly’ jurisdictions across the Americas.

“The result is a combination with much greater capacity and potential value than the sum of its parts,” said Gold Fields CEO Chris Griffith in a statement.

The Johannesburg-based company founded by Cecil Rhodes in 1887 has shifted away from its home market in recent years after facing power cuts, rising costs and the geological challenges of exploiting the world’s deepest deposits. Instead, the miner has looked to assets in Ghana, Australia and Latin America.

When the acquisition closes in the second half of the year, Yamana shares will be delisted from the NYSE, the Toronto Stock Exchange and the London Stock Exchange. The newly listed Gold Fields shares will be traded on the Johannesburg Stock Exchange and the NYSE.