Pan American Silver (TSX: PAAS; NASDAQ: PAAS) and Agnico Eagle Mines (TSX: AEM; NYSE: AEM) have announced a rival offer for Yamana Gold (TSX: YRI; NYSE: AUY), throwing Gold Fields’ (NYSE: GFI; JSE: GFI) US$6.7 billion offer for the company into question.
The new cash and stock offer valued at about US$4.8 billion may beat the bid from Johannesburg-based Gold Fields in May because its share price has slid in recent months, valuing its offer at just US$4 billion now.
Toronto-based Yamana, with assets across North and South America, said Friday the new offer is superior. However, it did not change its previous recommendation to shareholders to vote for the Gold Fields deal in a meeting set for Nov. 21.
Under its deal, Gold Fields now has five business days to respond to the new offer. Chief executive officer Chris Griffiths said on Friday his company’s deal is still better.
“The emergence of another offer indicates that other mining companies see the inherent value in Yamana’s assets,” Griffiths said in a news release. “It is clear that Gold Fields’ offer remains strategically and financially superior to the joint offer with lower operational and execution risk and higher sustained returns, given Gold Fields enjoys the free cash flow, balance sheet profile and technical capabilities to unlock the full potential of Yamana’s assets.”
The new offer would see Pan American and Agnico Eagle acquire all the issued and outstanding common shares of Yamana. Yamana would sell certain interests in its Canadian assets to Agnico Eagle, including a stake in the Canadian Malartic gold mine it doesn’t already own, keeping it in Canadian hands.
That offer has “clear operational synergies” for Agnico Eagle, analysts at Berenberg said in a note on Friday.
Yamana Gold’s Jacobina mine in Brazil. (Image courtesy of Yamana Gold.)
“Yamana shareholders are likely to be attracted to the cash element of the deal, alongside the offering of Agnico Eagle shares,” they said.
Pan American would take over four of Yamana’s mines, according to the new offer, making it a major precious metals producer in Latin America. It would be producing almost 30 million oz. of silver and about 1.1 million oz. of gold a year from the combined portfolio of 12 operations in the region, based on the companies’ guidance this year.
The deal would give Yamana shareholders US$1.0406 plus 0.0376 share in Agnico Eagle and 0.1598 share in Pan American for each share of Yamana held. The binding offer is not subject to financing conditions or additional due diligence. The cash part of the deal is about $1 billion.
In Toronto afternoon trading, Yamana Gold shares jumped about 15% to $6.41 apiece, Agnico Eagle’s stock price increased about 1% to $57.15 and Pan American shares fell nearly 10% to $18.88 each.
Gold Fields shares rose more than 11% to 154.05 rand in Johannesburg. The share price bounce may reflect shareholders’ relief that the new joint offer will win out over Gold Fields’ bid.
A major shareholder in Gold Fields, Redwheel Capital, described the company’s offer to buy Yamana as a “major error” in a letter to the board that the investor published on Thursday.
Agnico Eagle bought Kirkland Lake Gold for US$11 billion last year and Pan American bought Tahoe Resources for nearly US$1.1 billion in 2019.
Correction: The original article contained errors in the value of the offers for Yamana and incorrectly stated that Pan American was the purchaser of Kirkland Lake.
This article has quite a few errors and does not say much about the editor or the proofreading of an article. The millions that is says should be billions for the offers and pan american silver did not buy kirkland gold ===the eagle did
We apologize for the errors. They have now been corrected.
As always Northern Miner, thank you for your tremendous coverage of the situation.
As a shareholder of each of the three companies, I feel this to more representative of the value of $AUY | $YRI.TO and prove to be a master stroke for both $AEM and $PAAS.