NORTHAM Platinum has enlisted offers for either a corporate- or asset- deal after disclosing on Tuesday it had received an “exploratory” offer for the company from a rival platinum group metal miner.
“Shareholders are advised that the company’s chief executive officer and certain members of management received an unsolicited, exploratory, non-binding approach from a major producer in the South African PGM industry regarding a potential transaction with Northam involving an ‘asset-level transaction’ or a ‘corporate transaction’.
It had considered the approach against its own business growth plans and consequently decided to open up the company to rival offers from “interested parties” in an effort to create options and improve shareholder value.
The tactic, which clearly indicates a level of antipathy for the initial approach from the PGM rival – thought to be Valterra Platinum – has shades of Northam’s own bid for Impala Platinum amid the proposed Implats/Royal Bafokeng Platinum merger proposal. The fight for RBPlats raged for nearly two years before Northam abandoned the idea.
Hurbey Geldenhuys, spokesperson for Northam, said the approach was “not something that had emerged in the past week or in the recent past, and that the company had had sufficient time to consider it carefully”.
He added that this had given the company enough time to think through both its response and the competitive process announced on Tuesday.
The list of potential dealmakers for Northam is a short one given the high concentration of ownership in the PGM sector. Sibanye-Stillwater officially discounted itself from an interest in Northam. “It’s not us,” a spokesperson said.
Implats spokesperson Johan Theron also distanced his company from an offer for Northam at either asset or corporate level. In any event, a strong disaffection developed between Implats CEO Nico Muller and Paul Dunne, the long-standing CEO of Northam, during their fight over RBPlats.
Said Northam on its go-foward strategy: “In the circumstances, the board has resolved to initiate a strategic, competitive process to proactively solicit proposals from interested parties regarding one or more potential transactions, with a view to maximising shareholder value”.
The identity of participants and possible deal structures would not be disclosed. However Northam said it was open to credible all-comers.
Enlisting rival offers for the business, Northam hoped to create optionality and increase shareholder value, it said. This would be either through value-accretive transactions emerging from the process or through continued investment in Northam as it executes its growth objectives.
A structured process would also reduce the impact on management from continued approaches by third parties and allow the management team to remain focused without “undue pressure and uncertainty,” it said.
A memorandum on Northam will be made available after publishing its annual results ended June due on Friday (28 August). An investor roadshow would follow, it said.
Timeline
Interested parties have until 5pm on 1 December to submit expressions of interest, after which Northam will notify applicants whether they have been admitted to the process.
The process will then run through three phases, starting with indicative, non-binding proposals before shortlisted participants are invited to submit final, formal offers.
In the third phase, Northam will enter into exclusive or parallel negotiations with one or more parties, with binding transaction agreements to be concluded if a deal is reached.
