Sibanye-Stillwater makes all-share bid to take over Lonmin

Neal Froneman, Sibanye-Stillwater CEO

Embattled platinum producer Lonmin has received a “get out of jail card”  from Sibanye-Stillwater which is making an all-share takeover offer for the company to be carried out via a scheme of arrangement between Lonmin and the Lonmin shareholders in terms of the UK Companies Act.

The offer values Lonmin at about £285m (about R5.1bn) which represents a premium of about 57% on the closing Lonmin price of 63.8 pence on December 13 and a 41% premium to the 30-day trading volume weighted average price per Lonmin share of 71.1p for the period ended December 13.

Each Lonmin shareholder will received 0.967 new Sibanye-Stillwater shares.  Following completion of the acquisition Lonmin shareholders will hold approximately 11.3% of the enlarged Sibanye-Stillwater group and Sibanye Stillwater shareholders will hold about 88.7% of the enlarged Sibanye-Stillwater group.

The offer is being recommended to shareholders by the managements of both groups.  A  joint statement issued today commented, “ The board of Lonmin believes that the offer is in the best interests of Lonmin shareholders and all other stakeholders of Lonmin and provides Lonmin with a comprehensive and sustainable solution to the adverse challenges it faces.

“The combination of Lonmin and Sibanye-Stillwater creates a larger and more resilient company with greater geographical and commodity diversification that is better able to withstand short-term commodity price and foreign exchange volatility.”

The statement also said benefits to Sibanye-Stillwater included access to its own processing facilities in South Africa and noted, “Sibanye-Stillwater has developed a conservative Lonmin operating plan, which is not contingent on the development of new major capital projects and therefore limits downside risk while providing full upside optionality in a higher South African rand platinum group price environment.”