(Bloomberg) — Gold Fields Ltd. agreed to buy Canada’s Yamana Gold Inc. for about $7 billion in shares in a deal that will make the South African miner the world’s No. 4 gold producer.
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Yamana has mines in Canada, Argentina, Chile and Brazil, and Gold Fields said the deal fits with its strategy of expanding in “mining friendly” jurisdictions across the Americas. The South African company, founded by Cecil Rhodes in 1887, has shifted focus in recent years to more lucrative mines in Ghana, Australia and Latin America as producers in its home country struggle with power cuts, soaring costs and the geological challenges of exploiting the world’s deepest deposits.
Johannesburg-based Gold Fields will offer 0.6 of one of its shares for each Yamana share, the company said in a statement. Based on the 10-day volume weighted average traded price of Gold Fields’ American depositary shares, the deal would imply a 34% premium to Yamana’s closing share price on May 27, the company said. Gold Fields fell as much as 13% in Johannesburg trading.
“The result is a combination with much greater capacity and potential value than the sum of its parts,” Gold Fields Chief Executive Officer Chris Griffith said in the statement.
Read: Gold Fields Eyes Americas Expansion Despite Populist Moves
The tie-up is the latest in a revived shift toward consolidation in the gold industry over the past year. Newcrest Mining Ltd. agreed in November to buy Pretium Resources Inc. in a cash and shares deal valuing the Canadian gold producer at about $2.8 billion, while in September, Agnico Eagle Mines Ltd. and Kirkland Lake Gold Ltd. announced a “merger of equals” valued at about C$13.4 billion.
Yamana’s board has agreed to back the deal, which will require approval from both sets of shareholders and is expected to close in the second half of the year. Gold Fields shareholders would own about 61% of the combined company, Yamana investors would hold 39%, and the company will remain headquartered in Johannesburg.
(Updates with shares in third paragraph)
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