Northam Platinum has immediately withdrawn its takeover bid for Royal Bafokeng Platinum (RBPlat), potentially handing its bigger rival Impala Platinum (Implats) a fighting chance to lay its hands on the mid-tier platinum miner envied for its large, shallow and high-quality platinum group metals (PGMs).
Northam said late on Wednesday after the market close that it was pulling the plug on RBPlat because PGM basket prices have fallen significantly since its R17bn cash offer was made in December.
Prices of PGMs, which are primarily used to cut harmful emissions in internal combustion engines and jewellery, have dropped off their historic highs reached in 2021 when the world was in the clutches of the Covid-19 pandemic, which triggered global supply chains. The global economic outlook has also become uncertain, potentially affecting the demand outlook.
The rhodium closing price has fallen and remained below $9 000oz for 12 consecutive trading days, Northam said in a statement. Its peak was close to $30,0000z at the height of the pandemic.
Its withdrawal comes just days after asset manager Visio, which holds a minority stake in Northam, called on the management to walk away from the proposed deal because it argued it was not in the best interest of the shareholders.
Visio, which manages more than R35bn in assets on behalf of its clients, said Northam is one of the only PGM producers with the enviable position of significant organic growth, which should allow it to achieve good scale and further improve its cost position. Given these favourable dynamics, there is no justification for overpaying and risking the balance sheet, the asset manager said on Monday.
The latest developments mark an end to the drawn-out tug-of-war between Northam and Implats over the contested ore body. With Northam now out of the equation, it implies that CEO Nico Muller stands a chance to realise the long-standing goal of extending the life of Implats’ ageing, deep-level operations in Rustenburg.
Implats is seeking to gain majority control in its crosstown rival after accumulating 41.54% of its shares over a period of just more than a year, while Northam holds nearly 35% with the option to increase it to 38%. The Public Investment Corporation is the potential kingmaker with a shareholding of 9.9%.
The protracted battle between the two parties has taken its toll on the stakeholders involved, with RBPlat CEO Steve Phiri saying in February that the company’s ability to pursue growth plans was limited while some personnel opted to leave due to uncertainty.
Muller has previously voiced frustration at the many delays, which in part were caused by regulatory authorities.
Late in March, Implats extended its bid by another month while it awaited a takeover compliance certificate from the mergers & acquisition watchdog.
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