Impala Platinum (Implats), which is now the sole contender vying for a controlling stake in Royal Bafokeng Platinum (RBPlat) after its rival Northam Platinum pulled out of the race, is still counting on the remaining RBPlat shareholders to back its proposal.
“It does not materially change anything on our side. We have been very clear on the rationale, process and timing,” Implats spokesperson Johan Theron told Business Day on Thursday, a day after Northam dropped its own bid, citing the drop in platinum group metals (PGM) prices.
“Hopefully, it clears the air ... that the much-hyped Northam offer will not materialise, assisting remaining RBPlat shareholders to finally decide to sell to us or not.”
Implats has extended its cash and share offer until April 28 pending receipt of the takeover compliance certificate from the mergers & acquisition watchdog. It is offering R90 per share in cash as well as 0.3 of an Impala share.
Implats has accumulated 41.54% of shares in RBPlat over 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 two rival miners have been slugging it out for months to gain control of RBPlat, envied for its rich PGM deposits.
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.
Meanwhile, Northam shares jumped as much as 19% on Thursday before pulling back to trade nearly 7% higher at R153.77 on the JSE in the afternoon. This suggested the market backed management’s decision to call off the proposed transaction.
Camissa Asset Management portfolio manager Mandi Dungwa said Northam’s proposed R17bn cash offer was determined at materially higher PGM prices.
“The valuation would have changed substantially at current PGM prices,” Dungwa said, adding that the fallout could affect the cash flow generation and the balance sheet if Northam pursued the transaction on the original terms.
Prices of PGMs, which are primarily used to cut harmful emissions in internal combustion engines and for making jewellery, have dropped off their historic highs reached in 2021 when the world was in the clutches of the Covid-19 pandemic and global supply chains were hit. The global economic outlook has also become uncertain, potentially affecting the demand outlook.
The deterioration in the performance of RBPlat’s Styldrift operation was another concern, according to Dungwa.
“The market was never happy with the deal as the company paid a large amount of money at the top of the commodity cycle,” said Peter Major, director of mining at Modern Corporate Solutions.
“The industry and the market love Paul. But not ‘this deal’ — and at the price and terms and conditions he was proposing,” he said, referring to Northam CEO Paul Dunne.
RBPlat said in February that the extended battle is limiting its ability to pursue growth plans, with some personnel opting to leave due to uncertainty, underscoring the frustration at the drawn-out process.
“The uncertainty caused by the delay in finalising the corporate action is what has become a key risk to managing our people, their morale and retention,” RBPlat CEO Steve Phiri said at the time.
“We are unable to formulate a long-term strategy and implement aspects of our current strategy, which includes growth. Our capital allocation abilities are constrained.”
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