Impala Platinum Holdings (Implats) has increased its stake in Johannesburg-listed Royal Bafokeng Platinum Ltd (RBPlat) and has waived some terms of the tender offer in its bid to take over the company.
Implats said Wednesday it has bought 14 million additional RBPlat shares, or a 4.86% stake, taking its total holding to 29.38%. On Thursday, Implats bought 7.4 million RBPlat shares, representing a 2.56% stake. It now owns 31.94% of RBPlat.
This comes soon after Implats bought a 24.52% stake in RBPlat for about $660 million. The company had bought the stake from Abax Investments, Allan Gray (Pty) Ltd, Coronation Asset Management (Pty) Ltd, MandG Investment Managers (Pty) Ltd and Ninety One SA (Pty) Ltd.
The development comes just weeks after Implats was rebuffed by Royal Bafokeng Holdings (RBH) and sets the stage for a possible bidding war with Northam Platinum Holdings.
Implats didn’t name the sellers of the latest transactions. However, based on the value at which Implats intends to acquire other shares of the RBPlat, it would have spent around ZAR2.1 billion, or $133 million, on Wednesday and another ZAR1.1 billion ($69.4 million) on Thursday.
This would mean it has already spent close to $870 million to buy nearly one-third of RBPlat.
Implats had previously said it intended to make a general offer to the other shareholders of RBPlat to acquire all the issued ordinary shares at ZAR150 per share, consisting of a cash amount of ZAR90 apiece and 0.300 ordinary share in Implats. Its offer is conditional on the company getting at least a 50% stake in RBPlat.
Meanwhile, Implats said it has decided to waive some conditions precedent for the transaction. These include a previous condition that the production output (in ounces) of RBPlat and its subsidiaries for any rolling three-month period should not reduce by more than 15% sequentially till the deal is completed and there should not be 20% reduction or more in the free cash flow of RBPlat and its subsidiaries for any rolling three-month period.
The offer came three weeks after RBPlat said that RBH, its single-largest shareholder, had decided to reject a proposed transaction where Implats was looking to buy RBPlat.
On October 27, Implats and RBPlat had said that the two companies were in talks for Impala to acquire 100% of the issued ordinary shares of RBPlat, other than treasury shares held by the RBPlat Group.
Subsequently, RBH, which represents the ethnic homeland of the Bafokeng people in South Africa, inked a transaction to sell up to 33.3% stake out of its 36.1% stake in RBPlat for around ZAR17.2 billion ($1.15 billion) after accepting an unsolicited cash-and-stock offer from Northam Platinum.
Northam has already bought a 32.8% stake and has the option to increase its holding to 33.3%. The deal involves a cash payment of ZAR8.6 billion and a share issuance resulting in RBH holding an 8.7% stake in Northam.
Implats’ offer at ZAR150 a share of RPlat is nearly 17% less than that of ZAR180 a share paid by Northam to RBH. But Northam has not made any general offer to other shareholders as yet. Given that it bought the stake at a higher price it is unlikely to accept Implats’ offer.
RBPlat is a mid-tier platinum group metals producer. It originated from the Bafokeng Rasimone Platinum Mine (BRPM), a joint venture between Anglo American Platinum (Amplats) and RBH.
BRPM sold its first platinum concentrate to Amplats for beneficiation in its refineries in December 1999. Ten years later, RBPlat obtained a 67% stake in the JV through a restructuring and took over operational control in January 2010. In November 2010, RBPlat listed on the Johannesburg Stock Exchange.
In July 2018, RBPlat entered into an agreement with Amplats to acquire the balance 33% interest in the BRPM JV via a two-phased transaction. The first phase, which involved the acquisition of Amplats’ participation interest in the BRPM JV, was completed in December 2018. The second phase, which involved RBPlat taking full title in respect of Amplats’ 33% interest in the mining rights, was approved by regulators in July 2019.
RBPlat mines platinum group metals in the Merensky and UG2 reefs on the Boschkoppie, Styldrift and Frischgewaagd farms in the Rustenburg area. These have been identified as hosting the last undeveloped Merensky reef on the western limb of the Bushveld complex. RBPlat’s assets are the only known significant shallow high-grade Merensky resources and reserves still available for mining in South Africa.
RBPlat shares have doubled in the last one year. After shrinking by a fifth when RBH rejected the Implats offer, the shares have climbed back again nearly a fifth on Monday after receiving another offer.
*This article has been updated to include Implats’ purchase of additional shares in RBPlat on Thursday.