The race is on to buy Northam Platinum, valued at R122bn on the JSE, after the group said it had received an unsolicited offer from one of its bigger rivals in South Africa.
The potential transaction is set to test the market’s appetite for big transactions in the platinum group metals sector.
The group’s shares shot up 6% on Tuesday after it informed the market of a possible transaction — four years after it outfoxed rival Impala Platinum (Implats) to buy Royal Bafokeng Platinum.
Northam, run by Paul Dunne, said management had received an “unsolicited, exploratory, nonbinding approach from a major producer in the South African PGM industry” about a potential transaction involving an “asset-level transaction” or a “corporate transaction”.
South Africa’s biggest PGM producers are Valterra, valued at R377bn on the JSE; Implats, valued at R209bn; and Sibanye, with a market cap of R142bn.
In response to the unsolicited offer, Northam has sought to broaden its options by inviting other investors who might be interested in its assets regarding “one or more potential transactions”.
“The board believes that the process will provide the company with increased optionality, thereby optimising shareholders’ investment value in the company, either through value-accretive transaction(s) which may emerge from the process or, alternatively, through continued investment in the company as it continues to execute on its growth objectives and deliver meaningful returns to shareholders,” Northam said.
“Furthermore, the process enables the company to communicate transparently with its various stakeholders and provides shareholders with an opportunity to evaluate their investment positions on an ongoing basis, which the company may not otherwise be able to do if engaged in bilateral negotiations.
“Given that the company will likely continue to attract interest going forward, the board also wishes to ensure that the management team is able to remain focused without undue pressure and uncertainty arising from continued approaches from third parties.
“By embarking on a structured and managed process, the impact on management will be reduced whilst enabling the company to consider value-creation opportunities.”
Northam, whose share price is up 27% over the past month, appointed One Capital Advisory as its exclusive corporate adviser on the process. One Capital’s relationship with Northam Platinum spans more than a decade, marked by major asset acquisitions and lucrative corporate deals.
The Johannesburg-based boutique transaction adviser has been an important part of Northam’s expansion since 2015, including significant mergers and acquisitions which have expanded its annual production from 380,000oz to 940,000oz.
Northam outlined a three-phase process towards a possible transaction. First, potential suitors will be asked to submit nonbinding proposals indicating indicative valuation ranges and the structure of the deal.
Suitors will then submit formal proposals, and the final phase will see Northam enter into exclusive or “parallel negotiations with one or more participants in respect of the terms and conditions of their proposed potential transaction”.
“The company will not prescribe the identity of process participants, nor the nature or structure of potential transaction(s) (which may involve, without limitation, the securities or asset base of the company or those of third parties),” Northam said.
“Accordingly, the company will consider credible proposals received from process participants in respect of transaction(s) that will create and enhance shareholder value. Each proposal will be evaluated having regard to, inter alia, the strategic rationale, financial terms, certainty of execution, and the overall interests of the company, shareholders, and other stakeholders.”
Over the past three years, mining deals have been driven mainly by gold and copper considerations — with the latter leading to several transactions as demand for renewable energy, electric vehicles, and AI infrastructure surges.
BHP, the world’s biggest mining group, twice attempted to buy Anglo’s assets. Anglo, which spun off its PGM assets last year, went on to strike a deal to buy Canadian copper miner Teck in a merger “of equals” valued at $58bn.
Rio Tinto and Glencore also sought to strike a merger deal earlier this year, before talks were terminated over valuation differences.
PGM prices have rebounded strongly from 2024 lows into a high-price environment, driven by a structural supply deficit and stronger-than-expected global demand for hybrid vehicles.
The resurgence has given investors renewed confidence in the sector. Patrice Motsepe’s African Rainbow Minerals last month said it had approved a R15.2bn plan to upgrade the Bokoni PGM mine and restart the Nkomati nickel mine.
Business Day