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Gold Fields Ltd's deal to acquire Yamana Gold Inc is an expensive error, a top-10 investor in the Johannesburg-listed miner said on Friday.
RWC Partners Ltd, or Redwheel, which owns roughly a 3% stake in Gold Fields, noted the $6.7 billion bid for Yamana is a ‘significant 36% premium’ to the Toronto-based firm's closing price a day before the offer was announced.
‘GFI's sharp 24% share price decline following the surprise announcement is a clear indication that a lot of the market believe that the company has made a serious error in its takeover approach. Redwheel has been a significant investor in Goldfields for several years, and we believe that the company should withdraw the offer and concentrate on the excellent organic growth options which it already owns,’ Redwheel added.
Although the market responded to the deal with great scepticism, Redwheel is among the first major investors to publicly speak out against it.
‘While we acknowledge GFI's desire to secure long term production growth, we believe that the takeover of [Yamana] is both too expensive and not guaranteed to deliver production growth and profitability,’ Redwheel added.
Gold Fields shares closed up 9.5% at R 156.50 in Johannesburg on Friday. Yamana shares were 1.7% lower in London at 422.80 pence.
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