Sibanye-Stillwater increases offer for Lonmin

The diversified miner considers that Lonmin is financially distressed.

Diversified miner Sibanye-Stillwater has increased the recommended all-share offer for Lonmin in acknowledgment of improved pricing for platinum group metals (PGMs).

Sibanye-Stillwater said it would offer one share for each Lonmin share compared to its previous offer of 0.967 shares. This represents an increase of 3.4 percent.

The deal between Sibanye-Stillwater and Lonmin create the world’s No.2 platinum producer.

 London-listed Lonmin is struggling as it was hit hard by the decline in platinum group prices and has had to work to cut spending in order to retain a positive balance sheet, required by conditions of Sibanye’s proposed offer.

Lonmin said Sibanye-Stillwater increased the offer to balance against the fact that the former continues to be financially distressed and unable to fund significant investments to sustain its business and associated employment.

The combination of the two companies is currently the subject of an appeal by the Association of Mineworkers & Construction Union (Amcu) at the Competition Tribunal.  Amcu has appealed the decision in November 2018 by the Tribunal to approve Sibanye-Stillwater’s offer for Lonmin subject to certain specific conditions.

One of the conditions of the tribunal’s approval of the transaction was that the parties observed a six-month moratorium on retrenchments. Lonmin had already committed to the reduction in employee numbers of some 12 500 over three years.