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South Africa's Gold Fields will buy Australia's Gold Road for $2.4 billion in a deal

Gold Road Resources announced on Monday that South Africa's Gold Fields would acquire Gold Road Resources as part of a sweetened agreement, valuing Gold Road's Australian equity at A$3.7billion ($2.39billion), Gold Road. This comes amid a surge in mergers and acquisitions due to the sky-high gold prices.

Gold Road's share price rose as much as 12 percent on the offer. The offer was made at a premium of 14.5% to the last closing price.

The purchase will allow Gold Fields, a joint-venture partner with Gold Road, to consolidate its ownership of the low-cost and long-life Gruyere Gold Mine in Western Australia.

The deal is the third major one in six months, in a sector that has become a hotbed for global mergers and purchases. Rising geopolitical uncertainty is driving soaring yellow metal prices to record highs.

The Australian gold miner Northern Star Resources has agreed to purchase De Grey Mining (DEG.AX), in a deal that involves all shares worth A$5 Billion, while Ramelius Resources announced it would acquire smaller rival Spartan Resources in order to create a combined A$4.2 Billion group.

Gold Road shareholders are entitled to receive A$2.52 in cash per share, and a variable cash component that is equal to the value of their stakes in Northern Star Resources.

Gold Road had rejected Gold Fields' March offer of A$2.27 per share in cash plus the variable component, which Gold Fields offered.

The deal was worth A$3.40 for each Gold Road share as of Friday's closing.

Gold Fields announced on May 2, that it is in active talks with Gold Road. However, the company did not respond immediately to a comment request made outside normal office hours on Monday. (1 Australian dollar = 1.5504 dollars) (Reporting and editing by Kim Coghill, Sonali Paul and Melanie Burton from Melbourne and Bengaluru)

(source: Reuters)