(Bloomberg) — A bidding war may be brewing for Yamana Gold Inc., with Pan American Silver Corp. and Agnico Eagle Mines Ltd. making a $4.8 billion offer to buy the Canadian miner weeks before investors were set to vote on a merger with South Africa’s Gold Fields Ltd.
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Pan American Silver and Agnico Eagle offered to buy Yamana in a cash-and-stock deal valued at $5.02 a share, the companies said Friday in a statement. Gold Fields, which offered to buy Yamana at the end of May, has five business days to match the offer.
US-listed shares of Yamana surged 18% to $4.81 a share at 11:05 a.m. in New York. Shares of Pan American Silver fell 5.4% while Agnico Eagle rose 3.9% in US trading.
Pan American is offering shares and Agnico Eagle will contribute $1 billion cash and shares under the agreement. The deal would make Pan American a major precious metals producer in Latin America, while Toronto-based Agnico Eagle will gain operational control of Canada’s Melartic mine after getting Yamana’s stake.
Yamana confirmed Friday that it received the unsolicited offer, calling it a superior proposal to Gold Fields’ deal.
Gold Fields disagrees.
“The emergence of another offer indicates that other mining companies see the inherent value in Yamana’s assets,” the Johannesburg-based gold producer said Friday in a statement. “Gold Fields will continue to work towards completion of the transaction.”
Gold Fields and Yamana have been facing investor criticisms over the combination mainly due to the high premium offered to do the deal that was valued at $7.25 billion when announced May 31. Yamana shareholders are scheduled to vote on the deal on Nov. 21, with Gold Fields investors voting on Nov. 22.
The deal is key to Gold Fields’ expansion in the Americas, as producers in South Africa have struggled with the geological challenges of operating some of the world’s deepest mines.
The rival offer caused shares in Gold Fields to surge 11% in Johannesburg trading, lifting the company’s all-stock offer to about $5.49 a share and valuing the deal at $5.53 billion.
“The two deals on the table are not too far off, especially considering the $300 million break fee Yamana would have to pay Gold Fields,” Credit Suisse analyst Jessica Xu said in a note to clients.
She said Gold Fields may end up restructuring its transaction to assign a higher value to Yamana and offer some cash consideration, or walk away from the deal entirely.
(Adds terms of transaction from second paragraph.)
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