One of the investors in South Africa’s Gold Fields has called on the company to withdraw its all-share offer to acquire Canada-based Yamana Gold, citing the deal would be too expensive, reported Financial Times (FT).
Holding a 3% stake in Gold Fields, Redwheel said that the South African company should focus on the ‘excellent organic growth options which it already owns’ as the takeover proposal offers no guarantee of profitability and production growth.
According to the $6.7bn deal signed last month, Yamana shareholders can redeem their shares for Gold Fields shares at a swap ratio of 0.6.
This would create a top-four global gold major having a diversified portfolio of long-life assets.
Gold Fields is required to secure 75% of shareholder support for the deal to be approved whereas Yamana requires about 67%.
Redwheel was quoted by the publication as saying: “Based on Gold Fields own current project pipeline, we expect that it can drive current production to over 2.7 million (ounces) by 2025 before trending down to two million ounces.
“This production growth is already one of the strongest across the major gold miners globally. We believe the company has ample time to be opportunistic over the next few years rather than rushing into a significantly dilutive acquisition today.”
Gold Fields plans to continue engaging with its shareholders over the proposed transaction’s merits.
The South African gold miner was cited by FT as saying: “By combining Gold Fields’ cash generative gold mines with Yamana’s immediate and longer-term pipeline of high-quality, long-life assets, we believe this transaction will secure the best interests of the company and its shareholders.”
