South Africa’s antitrust agency said on Wednesday that it was scrutinizing a hostile takeover battle for one of the country’s leading platinum producers, with the regulator aware of the potential impact of a pending transaction on the nation’s broader economy. The Competition Commission of South Africa said that it was looking into a takeover offer from Sibanye-Stillwater Limited for Northam Platinum Limited, which is the largest supplier of platinum group metals in the country.<\/p>\n\n\n\n
The deal has sparked a fierce takeover battle between Sibanye-Stillwater and Northam’s management, which is insisting the offer is woefully inadequate. The Commission said in a statement that it was looking at the “potential impact of any merger between Sibanye-Stillwater and Northam on the platinum group metal industry, and the South African economy and labour market”.<\/p>\n\n\n\n
It added that although the two companies had not made any application for clearance under South Africa’s Competition Act, it was aware of the proposed merger through the media. The Commission said it would assess the potential effect of the merger on the “structure of the platinum group market, combined market shares, the competitive constraints to the merged entity, barriers to market entry and the possibility of higher prices being charged”.<\/p>\n\n\n\n
The acquisition shows the metals industry come back from a multi-year slump as prices climb and the South African rand slides, bolstering profits of platinum producers in the world’s biggest supplier of the precious metal. The acquisition also reflects investor confidence in South Africa’s platinum industry, which has been struggling with dwindling prices and wage disputes in recent years.<\/p>\n\n\n\n
Sibanye-Stillwater, which is an integrated precious metals mining company with headquarters in Johannesburg, has offered to pay R3.20 (US$0.22) a share for Northam, a 4 percem discount to its closing price on Wednesday. Northam is the second-biggest producer of platinumgroup metals in the country. It is widely used in jewelry and is a key component in the production of emissions-curbing catalysts for cars.<\/p>\n\n\n\n
The hostile takeover bid posed by Sibanye-Stillwater for Northam has been met with resistance from the target’s directors, who have urged shareholders to reject the offer and have detailed the flaws in Sibanye’s proposed financing and its assessment of the mining rights Northam holds. Northam’s executive chairman, Paul Dunne, has called the offer “wholly inadequate” and said that it does not reflect Northam’s true value as a long-term strategic asset in South Africa.<\/p>\n\n\n\n
The takeover bid has also been opposed by the South African government, with President Cyril Ramaphosa’s economic adviser, Tshepo Mongalo, reportedly saying that the government was looking into whether Sibanye-Stillwater had made a fair offer. Mongalo further warned that any takeover of Northam should be for the “good of South African citizens and not for a mere price” and that the country may subject the deal to “stringent scrutiny”.<\/p>\n\n\n\n
The Commission is now gathering information about the transaction and plans to hold public hearings with Northam, Sibanye-Stillwater and other interested parties. It said it would “conclude its assessment of the impact of the proposed merger on the South African market and economy based on the available information even if the acquisition is not notified” to the Commission.<\/p>\n\n\n\n
News of the Commission’s investigation came after Northam’s main shareholder, a trust fund managed by Grindrod Asset Management that holds 27.5 percent of the company’s shares, said it had not been approached regarding the takeover and was unlikely to accept the offer. It is the latest hurdle faced by Sibanye-Stillwater, which also has operations in the United States and Canada, in its bid to become the world’s biggest platinum producer. Under the terms of the proposed deal, Sibanye-Stillwater would pay around $842 million for Northam, with the total offer amounting to around $1 billion, including debt.<\/p>\n","protected":false},"excerpt":{"rendered":"
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