Anglo American raised R7.2bn from the sale of a 5% stake in its platinum division, completing the first step in its stated plans to offload the business in its strategy to boost shareholder returns.
Under the deal announced late on Tuesday, Anglo sold 13.9-million shares, worth about R7.2bn, via an accelerated bookbuild — a share sale conducted in a short time — in Anglo American Platinum (Amplats) for R515 each.
The deal is one of Anglo CEO Duncan Wanblad’s measures to generate higher returns and fend off suitors such as BHP, whose takeover overtures earlier this year were rebuffed as too complex and undervalued the company. Under Wanblad’s plan, Anglo would consider a secondary listing for Amplats on the London Stock Exchange in addition to its primary listing on the JSE.
“Through this placing, we are moving proactively to distribute some of our [Amplats] shares into the hands of a wider range of investors ahead of the planned demerger,” Wanblad said in a statement.
“This is expected to increase share trading liquidity in the near term, as well as mitigate the impact of flowback following the demerger as a result of fewer [Amplats] shares being distributed to Anglo American’s shareholders.”
The money from the placing will contribute to cutting Anglo’s net debt, and it will align with the company’s focus on copper, iron ore and crop nutrients.
The bookbuild process, which was carried out overnight, was managed by Goldman Sachs, Morgan Stanley and Rand Merchant Bank.
The shares are not being offered to the public but will nonetheless increase those in free float, ultimately leading to a rise in liquidity levels. As part of the placing, Anglo’s remaining shares in Amplats will be subject to a lock-up of 90 days, subject to customary exceptions.
The sale of the stake can be traced to Wanblad’s vision presented in May when he laid out a plan to sell Anglo’s coal assets, split and separately list Amplats and sell its share of De Beers, countering BHP’s R700bn-plus all paper bid for a more or less similar portfolio. The slimmed-down Anglo is pillared on copper, iron ore and crop nutrients. Still, Anglo is facing execution risks.
An unexpected fire at its Grosvenor mine in Australia could derail plans to sell its coking coal assets, potentially affecting the deal’s valuation and timing, analysts have said.
Possible writedowns
Anglo has already cut output for steelmaking coal due to the fire that rendered the affected sections inaccessible.
Anglo said in July that it was reassessing the value of its UK crop nutrients project, Woodsmith.
The review could lead to additional writedowns on the project that has already soaked up $7bn in capital expenditure, potentially testing shareholder faith in Wanblad’s vision and potential for future returns.
Update: September 11 2024
This story has been updated with new information.
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