GOLD Fields CEO, Chris Griffith sounded a confident note telling analysts at the firm’s interim results presentation on Thursday there was “a real likelihood” shareholders would approve the firm’s all-share bid for Yamana Gold.
“I think the market is beginning to understand the deal. The spread has come down so we are seeing shareholders coming back,” he said.
Shares in Gold Fields are 7% weaker since May 31 when the transaction was first unveiled – an improvement on the one quarter share price decline in the immediate aftermath of the deal. “The spread has come down so we are seeing shareholders coming back,” said Griffith.
Asked if Gold Fields would look to other growth alternatives if shareholders voted down the transaction, Griffith responded: “We don’t expect to see that because there is a real likelihood of getting shareholders over the line. But in the event they don’t [approve the deal], Gold Fields is in a good position with other alternatives in the future.”
Gold Fields’ offer of 0.6 of its shares for each Yamana share was criticised for being expensive and unnecessary even though group production is due to decline from about 2.7 million ounces to 2.1 million oz by the end of the decade.
For it to fly, Gold Fields needs 75% of its shareholders to support the deal; while for its part, Yamana Gold needs just two-thirds of total shareholder approval.
Assuming Gold Fields is successful in buying Yamana it will have minimum production of 3.2 million oz with potential to increase to 3.6 million oz – large enough to make it the third biggest gold producer globally assuming rivals don’t increase production.
Shareholders will be asked to vote on the transaction towards the end of October with completion expected in November. This is slightly later than first planned by Gold Fields as Yamana was conducting an independent valuation.
Griffith said this would be included in a circular to shareholders which would show “the value we can see and the price we will pay”. Griffith said after that Gold Fields will “engage with shareholders and that will be last push to get a positive vote”.
In June, Gold Fields sweetened its offer promising to pay higher dividends as well as investigating a listing of the firm’s shares in Toronto where Yamana trades. He discounted the prospect of further sweeteners.
Gold Fields shareholders were “fighting with us” because they believed the firm paid too large a premium, said Griffith. “I’m not sure they will be too happy if we want to sweeten the deal further.
“We want to get both sets of shareholders over the line. For Gold Fields shareholders, it’s a great deal as we get longer term assets and growth potential. That is way better than doing single deals. For Gold Fields shareholders there is an investment required but a return is also required. I do think we are getting shareholders over the line.”
