Yamana Gold Inc. [YRI-TSX, AUY-NYSE] is set to be acquired by South African giant Gold Fields Ltd. [GFI-NYSE] in a share exchange transaction worth US$6.7 billion. The combined company is expected to rank as the globeâ€™s third largest gold producer and fourth largest by market capitalization.
Yamana is a Canadian precious metals producer with significant gold and silver production, development stage properties and exploration properties in the Americas, including Brazil, Argentina, Chile, Mexico and Canada.
Its portfolio includes a 50% stake in Canadian Malartic, which ranks as Canadaâ€™s largest gold mine and Yamanaâ€™s biggest producer.
Yamana has said it expects to produce at least one million gold equivalent ounces this year and 1.03 million in 2023.
With head quarters in Johannesburg, South Africa Gold Fields is a diversified gold producer with nine operating mines in Australia, Chile, Ghana, Peru and South Africa, including the Asanko joint venture in Ghana, with total annual gold equivalent production of approximately 2.3 million ounces.
Under the terms of the transaction, all of the outstanding shares of Yamana will be exchanged at a ratio of 0.6 of an ordinary share in Gold Fields, or 0.6 of a Gold Fields American depository share for each Yamana share.
The transaction implies a valuation for Yamana of US$6.7 billion and represents a premium of 33.8% to the 10-day volume weighted average price of Yamana shares on the New York Stock Exchange on May 27, 2022.
On May 27, 2022, Yamana shares closed at $6.75 and currently trade in a 52-week range of $8.05 and $4.78.
Yamana Executive Chairman Peter Marrone said the deal is being announcedÂ after many months of discussions and due diligence. â€œThis is an outstanding opportunity for our shareholders, employees and local communities in which we operate throughout the Americas,â€™â€™ he said.
â€œThe 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.â€™â€™
The combined group is expected to benefit form near-term growth of Gold Fieldsâ€™ Salares Norte and South Deep mines and longer-term growth from Yamanaâ€™s Wasamac, Malartic Odyssey, and Mara projects, as well as additional opportunities in the Canadian companyâ€™s exploration pipeline.
The transaction will require the approval of at least 66-2/3% of the votes cast by Yamana shareholders voting in person or represented by proxy at a special meeting of shareholders called for that purpose.
The arrangement deal provides that, under certain circumstances, Gold Fields and Yamana will be entitled to termination fees worth US$300 million and US$450 million respectively.
Upon closing, it is expected that Gold Fields shareholders and Yamana shareholders will own approximately 61% and 39% of the combined group, respectively.