Gold Fields has decided against increasing its offer for rival miner Yamana Gold after a surprise joint bid by a pair of competitors threw the proposed takeover into jeopardy.
The board said in a stock exchange statement on Monday that sticking with the original all-stock offer was based on its “commitment to capital discipline” and considerations of “fairness” for shareholders in Gold Fields and Yamana over the long term.
On Friday, precious metals mining groups Pan American and Agnico Eagle unveiled a rival stock and cash deal worth $4.8bn to split Yamana’s assets between them, trumping the bid made by South Africa’s Gold Fields at the end of May.
The initial all-stock offer by Gold Fields valued Canada’s Yamana at $6.7bn but a drop in Gold Fields’ share price driven by investor disappointment at the deal and softer gold prices brought the value of the offer down to approximately $4bn as of last week.
The fragmented gold sector, which has a reputation for overspending, poor capital discipline and excessive executive pay in North America, has been undergoing consolidation in recent years.
The takeover battle comes as gold mining companies struggle to deal with sharply rising costs for inputs such as fuel, cyanide and explosives.
The merger of Gold Fields and Yamana would have created the fourth-largest gold mining company in the world but Gold Fields came under fire from its shareholders who viewed the deal as expensive and dilutive.
Gold Fields shares, down 0.2 per cent in early Monday trading, have fallen nearly 12 per cent this year. Yamana stock has risen 24 per cent this year.