Competition authority approves Lonmin, Sibanye deal
It orders a six-month hold on job cuts post-merger.
South Africa’s Competition Tribunal has approved Sibanye-Stillwater’s takeover of platinum producer Lonmin but imposed a six-month hold on job cuts, it announced on Wednesday.
Sibanye has proposed to buy Lonmin for about R5.73 billion to create the world’s number two platinum producer at a time when prices for the metal are depressed.
Trade unions have argued against the takeover as they believed that if approved, it would result in wide-scale retrenchments.
As part of its operational plan, Sibanye said it envisioned that it will retrench 13 334 jobs post the merger with Lonmin. Of these jobs, only 885 are merger specific since they arise from a duplication in overheads. Lonmin said it planned to retrench 10 156 employees as part of its operation plan of October 2017.
The competition authority, which has a mandate to protect employment as well as promote competition, said the issue of identifying the exact number of merger related retrenchments is “thus not clear-cut.”
“Even the figure of 885 is not easily identified as being merger related because the number is calculated by Sibanye as being the difference between savings of 62 jobs at the operational level and overhead merger related job losses of 947,” it said in a statement.
The competition authority also said Sibanye should be given an opportunity to do an in-depth assessment on the exact number of retrenchments and consult with trade unions.
“Accordingly, it is our view that the public interest will be best served if a moratorium were placed on all retrenchments for a period of six months from the implementation date.”
Lonmin CEO Ben Magara said in a statement that he believed the consolidation of platinum producers was a way to find a “sustainable solution to the industry’s challenges”.
“Despite our enviable mine to market operations and our positive Q4 performance, the fundamental challenges the company faces as a standalone business remain… Consequently, we firmly believe that the transaction is in the best interests of Lonmin shareholders and all other stakeholders of Lonmin, providing the company with a comprehensive and more certain solution,” said Ben.
Neal Froneman (pictured), the CEO of Sibanye-Stillwater, believes that the conditions imposed by the Competition Tribunal on the takeover are “fair, reasonable and in the best interest of all stakeholders.”
“We are confident that the integration of Lonmin’s PGM assets and Sibanye-Stillwater’s
adjacent PGM operations, will ensure a more sustainable and positive future for these assets and bring greater stability to the region,” Neal said in a statement.
The transaction remains subject to the approvals of Sibanye-Stillwater and Lonmin shareholders and the sanction of the UK court.