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Gold Fields has decided not to increase its takeover bid for Yamana Gold after a surprise joint bid by a pair of rival miners.
South Africa-based Gold Fields said on Monday it decided not to change its original all-stock offer because of a "commitment to capital discipline".
On Friday, precious metals mining groups Pan American and Agnico Eagle unveiled a rival stock and cash deal worth $4.8bn to split Yamana's assets in Latin America and Canada between them, trumping the bid made by Gold Fields at the end of May.
The initial all-stock offer by Gold Fields initially valued Canada's Yamana at $6.7bn but a drop in Gold Fields' share price driven by investor disappointment at the deal and softer gold prices brought the value of the offer down to approximately $4bn as of last week.
The fragmented gold sector, which has a reputation for overspending, poor capital discipline and excessive executive pay in North America, has been undergoing consolidation in recent years. A lack of spending on exploration and new projects mean many gold miners are turning to acquisitions to grow future production.
Toronto-based Yamana owns a portfolio of five producing precious metals mines located across Canada, Brazil, Chile and Argentina that generated 884,793 ounces of gold last year.
The takeover battle comes as gold mining companies struggle to deal with sharply rising costs for inputs such as fuel, cyanide and explosives at a time of weaker revenues. Gold prices have slid 18 per cent to $1,680 a troy ounce since peaking at an all-time high above $2,000 in March on rising interest rates and a strong dollar.
The merger of Gold Fields and Yamana would have created the fourth-largest gold mining company in the world but Gold Fields came under fire from its shareholders who viewed the deal as expensive and dilutive.
Gold Fields shares, down 1.7 per cent in early Monday trading in Johannesburg, have fallen nearly 12 per cent this year. Yamana's Toronto-listed stock has risen 27 per cent this year.
Chris Griffith, chief executive of Gold Fields, said: "The board was unanimous in its decision not to offer to change the terms of the transaction as we continue to believe our transaction is strategically and financially superior."
Yamana's board said on Friday that the offer from Pan American and Agnico Eagle was a "superior proposal".
Yamana shareholders will meet to vote on the Gold Fields offer on November 21, which could result in the Canadian miner paying out $300mn for pulling out of the deal.