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Gold Fields (GFI) to Acquire Yamana Gold for $6.7B in a Stock Deal

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Gold Fields Limited (GFI - Free Report) and Yamana Gold Inc. (AUY - Free Report) announced that they have entered into a definitive agreement per which Gold Fields will acquire all of the outstanding common shares of Yamana in a deal valued at around $6.7 billion. This will create a top-four global gold major with a diversified portfolio of high-quality, long-life flagship assets across some of the world’s most established gold mining jurisdictions with tangible near- and long-term growth opportunities.

Yamana has mines in Canada, Argentina, Chile and Brazil, which is in sync with South Africa-based Gold Field’s strategy of expanding in mining-friendly jurisdictions across the Americas. The combined group will be headquartered in Johannesburg with operations across South Africa, Ghana, Australia, Canada and South America. Yamana is a natural strategic fit for Gold Fields, with its high-quality, diversified portfolio of long-life assets located in mining-friendly rules-based jurisdictions across the Americas. Both the companies share the commitment to health, safety and environmental, social and governance.

The combined group will benefit from the near-term growth of Gold Fields’ Salares Norte and South Deep mines, longer-term growth from Yamana’s Wasamac, Malartic Odyssey and MARA projects, and additional opportunities in Yamana’s high-quality exploration pipeline.

Per the agreement, shareholders of Yamana Shares will receive 0.6 of an ordinary share in Gold Fields or 0.6 of a Gold Fields American depositary share for each Yamana Share. The deal value of $6.7 billion represents a premium of 33.8% to the 10-day Volume-Weighted Average Price of Yamana’s Shares of $5.201 on May 27, 2022 (the last trading day on the New York Stock Exchange prior to the announcement), and on the 10-day Volume-Weighted Average Price of Gold Fields ADSs of $11.592. Upon closing of the transaction, it is anticipated that Gold Fields Shareholders and Yamana Shareholders will own approximately 61% and 39% of the combined group, respectively.

The transaction has been approved by the board of directors of both companies. It is expected to close in the second half of 2022 subject to the satisfaction of other customary closing conditions.

Earlier this year, Agnico Eagle Mines Limited (AEM - Free Report) announced that it has completed its merger with Kirkland Lake Gold Ltd. The company’s merger with Kirkland Gold establishes the new Agnico Eagle as the industry's highest-quality senior gold producer. It is projected to have the lowest unit costs, highest margins, most favorable risk profile and industry-leading best practices in key areas of environmental, social and governance. The integrated entity is expected to have $2.3 billion of available liquidity, a mineral reserve base of 48 million ounces of gold, which has doubled over the last decade, and an extensive pipeline of development and exploration projects to drive sustainable, low-risk growth.

Year to date, shares of Gold Fields have gained 11% compared with the industry’s growth of 1.4%.

Zacks Investment Research
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Zacks Rank & a Stock to Consider

Gold Fields currently has a Zacks Rank #5 (Strong Sell).

A better-ranked stock worth considering in the basic materials space is Allegheny Technologies Inc. (ATI - Free Report) . Allegheny has a projected earnings growth rate of 869.2% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised upward by 27.3% in the past 60 days.

Allegheny’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of 128.9%, on average. ATI has gained around 11.3% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.