GOLD Fields has brought five months of feverish corporate action to a disappointing close, terminating its proposed takeover of Yamana Gold.
This came after the Canadians today changed their deal recommendation by instructing shareholders to vote against Gold Fields’ offer at a November 21 meeting.
In terms of a transaction agreement, a $300m in a break-fee is now payable to Gold Fields, the company said. Gold Fields said shareholders “would benefit” from the break-fee, although whether this would be held back to defray corporate costs, used to bolster the balance sheet for future deals, or be partly passed through to shareholders as a dividend remains to be seen.
As part of his pitch for Yamana, Gold Fields CEO Chris Griffith said Gold Fields would pay out 30% to 45% of normalised earnings at the interim and final dividend stage which compares to its current payout policy of 25% to 35% of normalised earnings. It remains unknown if this arrangement would remain intact.
In addition, the interim and final dividend payout for the 2023 financial year – roughly 12 months after the proposed completion of the takeover of Yamana Gold – was supposed to be 45% of normalised earnings.
“Gold Fields is disappointed by this outcome and continues to believe that the transaction was a financially and strategically superior offer for shareholders of both Gold Fields and Yamana,” it said in a statement to the JSE.
It added that pulling the offer was “the most disciplined and prudent course of action to maximise Gold Fields shareholder value”.
The exit of Gold Fields clears the way for the joint $4.8bn share and cash offer tabled by North American miners Agnico-Eagle and Pan American Silver which emerged on November 4. The joint offer pitched $1bn in cash and 153.5 million Pan American shares and 36.1 million Agnico shares.
Yamana shareholders would therefore receive $1.0406 in cash, 0.0376 of an Agnico Share and 0.1598 of a Pan American Share for each share held. This compared to Gold Fields’ bid of 0.64 Gold Fields share for each Yamana share held, pricing it at $4.7bn.
This was only slightly below the joint offer and largely par once the break-fee was included, but Agnico and Pan American also have the greater synergy with Yamana’s Canadian and South American assets while shareholders may also have been more comfortable holding the stock of the joint bidders rather than Gold Fields’ ADRs.
Commenting on the withdrawal from the deal, Griffith said on Tuesday evening that the company would press ahead with its strategy of “improving the quality and value of our portfolio.
“We have a detailed understanding of the market and have the operational expertise, balance sheet and cashflow profile to pursue other value creating strategic opportunities,” he said.
Yunus Suleman, chairperson of Gold Fields said the company was “not prepared to be drawn into a bidding war which would have been value destructive for our shareholders”.