(Bloomberg) -- Yamana Gold Inc. is at the center of a takeover battle after two Canadian mining companies teamed up on an unsolicited $4.8 billion offer to break up an earlier merger agreement with South Africa’s Gold Fields Ltd.

Pan American Silver Corp. and Agnico Eagle Mines Ltd. announced Friday a cash-and-stock deal valued at $5.02 a share. The proposed transaction would see Pan American acquire Yamana, while Agnico Eagle would buy Yamana’s Canadian assets.

Yamana said the proposal is “superior” to the Gold Fields agreement reached back in May. Under the terms of that offer, the South African company now has five business days to match the bid. Gold Field disputed Yamana’s assertion about the merits of the competing proposals, and said it will continue working toward completing its proposed merger.

US-listed shares of Yamana jumped 17% to $4.76 a share at 1:21 p.m. in New York. Shares of Vancouver-based Pan American fell 10% in Toronto, while Agnico Eagle rose 1%.

The battle to acquire the Toronto-based precious metals producer is the biggest gold deal of the year. The competition for Yamana underscores the need for miners to boost their output through acquisitions as costs to dig ore from the ground rise amid challenges of securing new gold deposits.

The latest proposal has Pan American offering shares to Yamana investors while Agnico Eagle offers shares and is contributing $1 billion cash. The deal would make Pan American a major precious metals producer in Latin America, while Agnico Eagle will gain operational control of Canada’s Malartic mine after getting Yamana’s stake.

Separately, Toronto-based Agnico Eagle said it will buy $150 million in shares of Pan American due to the “enhanced” opportunity coming out of their deal.

Investor Criticisms

Gold Fields has faced investor criticisms over their combination mainly due to the initial 34% premium offered in a deal valued at $7.25 billion when announced May 31.

“The emergence of another offer indicates that other mining companies see the inherent value in Yamana’s assets,” Johannesburg-based gold producer said Friday in a statement. “Gold Fields will continue to work towards completion of the transaction.”

Yamana shareholders are scheduled to vote on the transaction on Nov. 21, with Gold Fields investors voting 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 Gold Fields shares to jump 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 stock reaction to the rival bid may suggest that Gold Fields won’t enter into a bidding contest for Yamana, according to Mandi Dungwa, an analyst at Camissa Asset Management Ltd., in Cape Town. If Gold Fields doesn’t follow through, its investors won’t face share dilution, she said.

“Shareholders seem to believe they won’t match the terms of the rival offer,” Dungwa said. “Gold Fields would need to put up $1 billion on top of what was a premium offer, so I am not certain they can convince shareholders that the bidding war is worth it.”

The South African miner 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, according to Credit Suisse analyst Jessica Xu.

“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,” Xu said in a note to clients. 

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