Gold Fields CEO Chris Griffith says the group refused to be dragged into a bidding war.
South Africa-based Gold Fields will continue to execute on its strategy of improving the quality and value of its assets and, in time, will pursue other strategic opportunities, CEO Chris Griffith said on Wednesday.
The JSE- and NYSE-listed company has walked away from its deal to buy Canadian miner Yamana Gold, after refusing to be dragged into a bidding war with rivals Agnico Eagle Mines and Pan American Silver, which offered $4.8-billion in cash and shares for Yamana.
“We were not willing to compromise our prudent approach to capital allocation by getting into a bidding war – no matter how compelling the assets,” Griffith said.
Speaking on a media call following the failed bid, he said Gold Fields was disappointed with the outcome, as the group believed that it had put forward a compelling deal, which would have led to a stronger company for both sets of shareholders.
Although the acquisition of Yamana would have been a good way to execute on the group’s growth strategy, Griffith stressed that it was “not the only and won’t be the only” option available to the company.
“We have a number of assets that are of interest to us as part of our due diligence process. We will now, in the same discipline process, consider those other options in time to come as part of our broader strategy,” he told journalists, but said that it was too early to comment on what exactly the next opportunity for Gold Fields may be.
“The board has given us a clear direction to execute our strategy of improving the quality and value of our portfolio of assets and that is what we intend to do. The Gold Fields of today was built on disciplined M&A [mergers and acquisitions] and disciplined operations. We intend to maintain that discipline.”
Griffith said he was confident that the board "100% had his back", when questioned about whether he felt his job was safe following the failed deal.
The all-stock transaction, announced in May, has attracted criticism from some shareholders and resulted in Gold Fields' share price falling sharply.
"We certainly feel no shame in saying that we evaluated a number of opportunities and that we decided to chase down what we thought was the best opportunity. The board and the management team collectively looked at all the options that were available to us and believe this was the best opportunity on the table. We are not apologetic about chasing down what we think is the best opportunity."
The CEO also pushed back against a suggestion that the several months-long bidding process was a waste of time.
"It certainly was not a waste of time, both in terms of strategy and actually also the landing of a $300-million breaking fee," Griffith said.
Gold Fields will be receiving the break fee, which amounts to about R5.3-billion, in the coming days..
The group has not decided yet what it plans do with the cash, other than saying that it will form part of the normal capital allocation process. This could include paying cash back to shareholders, investing in future opportunities, or reducing debt. “All of those are great ways to return value to shareholders,” Griffith said.
Commenting on the dividend policy that Gold Fields announced in July to sweeten its offer for Yamana, he said that the new policy of paying shareholders a dividend of 30% to 45% of normalised earning remained unchanged. However, the promise of a 45% payout for the 2023 dividend would fall away.