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Northam outfoxes Impala Platinum with R17bn Royal Bafokeng deal

Transaction will see it secure around a 33% stake in its smaller JSE-listed platinum group metals (PGM) miner.
A sign stands at the entrance to Northam's Booysendal platinum mine outside the town of Lydenburg in Mpumalanga. Image: Waldo Swiegers/Bloomberg

Northam Platinum Holdings on Tuesday announced a circa R17-billion deal to secure a major one-third stake in Royal Bafokeng Platinum (RBPlat), effectively outfoxing fellow listed miner Impala Platinum’s (Implats) plans to buy out and delist RBPlat.

Revealing the deal in a Sens statement, Waterfall City-headquartered Northam said that it had signed a sale of shares agreement on Monday, November 8, with Royal Bafokeng Holdings Proprietary Limited (RBH) and Royal Bafokeng Investment Holding Company Proprietary Limited (RBIH), which will see it acquiring up to 33.3% of all the RBPlat ordinary shares in issue.

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RBIH is a wholly owned subsidiary of RBH.

The move comes just two weeks after Implats and RBPlat jointly announced that talks were underway for Implats to acquire 100% of the issued ordinary shares of RBPlat.

Read: Royal Bafokeng Platinum rockets almost 20% on proposed Implats buyout offer

“Northam will acquire 93 930 378 RBPlat shares from RBIH, amounting to 32.8% of the RBPlat net shares, for an aggregate purchase consideration of [circa] R17 billion representing R180.50 per RBPlat share,” the group noted in its Sens statement on Tuesday morning.

“The purchase consideration will be settled through a combination of the issue of ordinary shares in the share capital of Northam Holdings and cash,” it said.

“The parties have entered into a put and call option arrangement in terms of which Northam may acquire a further 0.5% of the RBPlat net shares for a purchase consideration of R135 per RBPlat share. Should the RBIH put and call option be exercised in full, Northam will acquire 33.3% of the RBPlat net shares in aggregate,” it added.

Worth noting is that Northam’s main offer price of R180.50 per share, is at a significant premium to RBPlat’s current share price.

RBPlat’s share price was just over 6% weaker (at R113.20 per share) in morning trade following the latest announcement. Northam’s shares plunged over 12% to just under R214 a share.

RBPlat and Northam share prices over a week

Meanwhile, in separately posted Sens statements on Tuesday Implats and RBPlats announced the withdrawal of the cautionary related to Implats’s non-binding 100% buyout offer.

Read: PGMs boom powers Implats to bonanza profits

“Implats shareholders are referred to the joint cautionary announcement released on Sens by the company and RBPlat on 27 October 2021 and the withdrawal of cautionary published by RBPlat today, 9 November 2021, in terms of which RBPlat stated that it has been informed by its single largest shareholder RBH that it is no longer supportive of the transaction referred to in the joint cautionary announcement and that in so far as it holds shares in RBPlat, it will vote against the proposed scheme of arrangement referred to in the joint cautionary announcement,” Implats noted in its latest Sens.

“As the scheme of arrangement cannot be implemented without the support of RBH, Implats will no longer be pursuing the transaction as referred to in the joint cautionary announcement and therefore caution is no longer required to be exercised by Implats shareholders when dealing in securities of the company,” it added.

With regards to its deal, Northam pointed out that the RBPlat transaction is aligned with its operational diversification strategy.

“The transaction concluded with Royal Bafokeng Holdings gives Northam a strategically important shareholding in RBPlat, creating significant long-term optionality for Northam. It aligns perfectly with our long-term growth, sustainability and diversification strategy and the introduction of Royal Bafokeng Holdings as a significant shareholder further strengthens our empowerment credentials,” said Northam’s CEO Paul Dunne.

“We are excited about the long-term value creation potential and the inherent optionality the transaction presents. In particular, we believe the complementary metals mix of RBPlat, with a higher relative platinum contribution, fits well within the broader Northam metals basket,” he added.

CEO of Royal Bafokeng Holdings Albertinah Kekana said the group is pleased to become a significant strategic shareholder in Northam, while also “realising a significant value unlock” from its long-term investment in and commitment to RBPlat.

“Equally important with this transaction is that Northam will partner with RBH and the RBN [Royal Bafokeng Nation] to deliver a number of high-value and high impact community initiatives for the RBN and the region as a whole, which includes employees and communities associated with RBPlat.”

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