The Competition Commission’s go-ahead for Impala Platinum’s (Implats) proposed acquisition of Royal Bafokeng Platinum (RBPlat) is not the death knell for attempts by rival Northam Platinum to buy the company, analysts say.
Implats and Northam have been vying to take control of RBPlats since late last year.
Implats said last week the Competition Commission had recommended that the proposed takeover be approved by the Competition Tribunal — subject to conditions “relating to public interest considerations, which had largely been agreed upon between Implats and the Competition Commission”.
However, Makhosi Nyamela, equity research analyst at FNB Wealth and Investments, said this week that the commission’s approval does not stop Northam from making a counter-offer to RBPlat shareholders.
“I don’t think Northam is completely out of the running. If Northam wants to make a counter-offer to RBPlat shareholders it can go ahead and do that and then can go on to apply for the same Competition Commission approval as Implats”.
Nyamela said the recommendation by the commission means more for Implats than Northam.
“Implats, being the third-largest producer, would have fears that the commission would have had issues with them being bigger. Whereas Northam is the smaller producer ... it is unlikely it would have been opposed by the commission.
“And I believe they are probably preparing a counter-offer for RBPlat to be announced in the next few weeks.”
Nyamela said there was a possibility for both Implats and Northam to operate RBPlat as a joint venture.
“But I don’t think that is something Northam will settle for yet. They indicated that they were looking for outright control.”
Implats, whose stake in RBPlat has increased to 37.6%, made a general offer of R150 a share to RBPlat shareholders in November.
The offer is backed by the RBPlat board, which called it fair and reasonable.
But Northam subsequently acquired an effective 32.5% from RBPlat majority shareholder Royal Bafokeng Holdings (RBH) at R180 a share, fuelling speculation of a bidding war with Implats.
After a long process of thorough investigation we can start with a positive recommendation
— Implats spokesperson Johan Theron
RBH is an investment company which, together with its sole shareholder, the Royal Bafokeng Nation Development Trust, is responsible for preserving and creating intergenerational wealth for the Royal Bafokeng nation, on whose land RBPlat is located.
As at the end of the first half of its 2022 financial year, Northam has a 34.68% stake in RBPlat, with options and rights of first refusal to purchase a further 3.29%.
Nyamela expects the Public Investment Corp (PIC) to be the kingmaker in the transaction. “Whoever the PIC sells to will likely gain control of RBPlat” — because the PIC is the single biggest shareholder that has not yet tendered.
The PIC owns about 10% of RBPlat.
Asked about its views on the commission’s recommendation, the PIC said only that it “notes the decision of the Competition Commission recommending that the Competition Tribunal approve Impala Platinum’s bid”.
Implats spokesperson Johan Theron said the company will begin the Competition Tribunal process in a strong position.
“If you enter the tribunal on the back foot, it will be difficult to get a positive outcome. After a long process of thorough investigation we can start with a positive recommendation from the Competition Commission — this is encouraging.”
Theron says any public interest considerations raised by the tribunal would be similar to issues raised when Sibanye-Stillwater took over rival Lonmin in 2019.
“The tribunal will want to know whether there will be merger-related job losses. They will try to gauge whether it is better for the public for the two companies operating independently or two companies operating as one.”
Theron said the company believes it has a strong case for the merger. It had done a lot of preparatory work and had the backing of organised labour and communities.
“We have spoken to the unions and we believe we have their full support because they see the merger as better for long-term job security. We have spoken to the community, there are some dissenting voices but they have their own interests.
“Overwhelmingly, the community is supportive of this because it will sustain economic activity in the area much longer than if the companies are working independently of each other.”
National Union of Mineworkers Rustenburg regional secretary Geoffrey Moatshe said organised labour would support a transaction that would not negatively affect employees.
“Whatever benefits or agreements we have with the targeted firm should not be compromised, that is where our interest lies. As to who buys what, or what I think, you would understand we do not have influence,” Moatshe said.
A Northam spokesperson said the company has no comment at this juncture. “The company will communicate with its shareholders at the appropriate time.”
Seleho Tsatsi, an investment analyst at Anchor Capital, said Implats has more synergies with RBPlat given they are both in the Rustenburg area, whereas Northam’s assets are in Limpopo and Mpumalanga. “They also have processing synergies. The view of the market is that Implats has more synergies.”
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