RBP: Royals are being sliced between two platinum majors

Northam Platinum has just announced that following unsolicited offers unilaterally extended by shareholders in RBPlat of all or some of their RBPlat Shares to Northam, Northam has acquired an additional 6 289 174 RBPlat Shares, representing c. 2.19% of the RBPlat Net Shares.

Following implementation of the further acquisitions in accordance with the usual settlement process on the JSE, Northam will hold c. 34.95% of the RBPlat Net Shares. The Further Acquisitions were implemented at a volume weighted average cash consideration of R162.70 per RBPlat Share and at a maximum cash consideration of R165.00 per RBPlat Share.

Northam is now within a hairsbreadth of requiring to make a mandatory offer to shareholders of Royal Bafokeng Platinum. The threshold that triggers a mandatory offer under takeover law is 35%. Some shareholders of Royal Bafokeng approached Northam to buy their shares, which the latter duly did at a volume-weighted price of R162.70 per share and a maximum price per share of R165. This increased Northam’s stake from 32.76% to 34.95% as mentioned above.

There is also an option structure that has been agreed with EMI over a further stake in Royal Bafokeng. For example, EMI can force Northam to buy 0.66%, which would push the company over the mandatory offer threshold. We must not forget that Implats is in the process of trying to mop up the shares not held by Northam, with that company having already built a stake that is similar in size to Northam’s.

Implats and Northam sit just below the mandatory offer threshold, but the Northam offer may be higher than the Implats offer depending on when and if the option is executed. Takeover law provisions would apply and the mandatory offer price would be based on the price paid in prior purchases of the shares in the market over a regulated time period.