The hottest takeover battle in South Africa’s mining sector has now ended, and the stakes were high.  

Northam Platinum (Northam) said late on Wednesday in a terse Sens announcement that it was terminating its takeover offer to the shareholders of Royal Bafokeng Platinum (RBPlat) with “immediate effect”. That paves the way for Impala Platinum (Implats) to likely acquire a majority stake in a coveted asset, with high-grade assets that are shallow, and adjacent to its existing operations. 

To wit, Implats’ initial offer — which still stands — was one of R90 a share and 0.3 Implats shares per RBPlat share. At close on Wednesday, that equalled R139.20 per share. RBPlat’s share price at close on Wednesday was R143.68 per share (Northam’s announcement came shortly after trading on the JSE closed). When the offer was initially made in November 2021, that represented a 23% premium on RBPlat’s share price 

Northam jumped into the fray shortly afterwards, snapping up more than 34% at R180 a share. A year later it announced a new offer to acquire all or a portion of the remaining RBPlat shares for R172.70 per share.  

Since then, there has been a brawl in the Bushveld. The upshot is that Implats now has 41% of RBPlat and Northam has just over 34%.  

But Northam said on Wednesday that a “Material Adverse Change” had altered the landscape.

“Following publication of the announcement and as at the trading day preceding the date of this announcement: the rhodium closing price has fallen and remained below $9,000.00 per oz, for 12 consecutive trading days; and the closing 4E ZAR basket price (the platinum group metals price) has fallen and remained below ZAR33,000 per oz… Accordingly, Material Adverse Changes have occurred in respect of two separate metrics,” the company said.  

So RBPlat’s remaining shareholders now have until the end of April to decide on the Implats offer. 

‘Ultimate goal is to get 100%’

“It doesn’t change anything on our side, we have an offer open until the end of April and remaining shareholders will have to decide for themselves. Now it is clear that there has only been one offer on the table,” Implats’ spokesperson, Johan Theron, told Business Maverick.

“Our ultimate goal is to get to 100%. The first critical hurdle is to get to 50%,” he said.  

To get to over 50%, the remaining shareholders include the Public Investment Corporation (PIC), which manages the retirement assets of South Africa’s public servants. It has around a 10% stake in RBPlat.  

To get to 100%, of course, it would require Northam to sell its stake — at a loss, given the current Implats’ offer. It could also hold on to it based on expectations of future earnings, dividend potential and things like that.

Both companies wanted the asset because, well, there are hardly any new PGM (platinum group metals) mines being built in South Africa, where the vast majority of the known reserves of the precious metal are found. 

Read more in Daily Maverick: R8-trillion question: Unlocking South Africa’s PGM potential 

But for Implats, the proximity to existing operations not only made sense in terms of synergies. It also represented a chance down the road to redeploy workers instead of laying them off as some of its adjacent Rustenburg operations run out of ore. Rustenburg has been a flashpoint of labour and social unrest, and no one wants to stir that hornet’s nest in a few years’ time.

Northam, even without RBPlat, will continue to grow production with its current mines, notably its mechanised Booysendal mine operation that straddles the Limpopo/Mpumalanga borders. Implats is bigger — and looks set to get even bigger — but both companies are profitable and seem to have good long-term prospects, though forecasting commodity prices is fraught with uncertainty. 

But this round of PGM consolidation looks like it will go to Implats. That doesn’t leave much left in the ring. DM/BM