LONDON, UK / ACCESSWIRE / April 26, 2017 / Active Wall St. blog coverage looks at the headline from Sibanye Gold Ltd. (NYSE: SBGL) and Stillwater Mining Co. (NYSE: SWC). Shareholders of South African bullion mining Company Sibanye Gold on April 25, 2017, approved the proposal for the acquisition of the Stillwater Mining at an Annual General Meeting held to discuss the acquisition. The proposal for acquisition garnered a massive 83% approval from the shareholders. This decision paves the way to complete the Sibanye/Stillwater deal. Register with us now for your free membership and blog access at:
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Sharing his views on the shareholders' vote, Neal Froneman, CEO of Sibanye said:
"We thank our shareholders for their support for this transaction which represents a unique and transformative opportunity to acquire world class, low-cost international PGM assets. Stillwater offers near-term organic production growth through the Blitz project, further enhancing Sibanye's asset portfolio and will create in Sibanye, a globally competitive South African mining champion with a unique commodity mix."
Progression of the deal
Sibanye had announced the acquisition of Stillwater on December 9, 2016, in a deal valued at approximately $2.2 billion. The transaction is expected to close in Q2 2017. The deal was hampered by routine notice received from the Committee on Foreign Investment in the United States (CFIUS) on March 3, 2017, stating that it wishes to investigate the deal in further depth. On April 14, 2017, CFIUS gave its unconditional approval to the Sibanye/Stillwater deal as all regulatory conditions were implemented satisfactorily and there were no unresolved national security issues with respect to the transaction. Once the CFIUS approval had been received Sibanye had called the Annual General Meeting of its shareholders on April 25, 2017 to discuss and vote for the deal.
On the other hand, Stillwater notified the New York Stock Exchange, on April 18, 2017, about the de-listing of the Company's shares from the Exchange once the merger is completed. Stillwater had also scheduled an annual meeting of its shareholders on April 25, 2017, and 88% of its shareholders voted in favor of the merger.
Details of both Companies
Colorado based Stillwater is the only US based mining Company that produces palladium and platinum. It is considered a Tier One producer of platinum group metals (PGMs). The Company is also the largest primary producer of PGMs outside of South Africa and the Russian Federation. PGMs have various industrial applications including automobile catalysts, fuel cells, hydrogen purification, electronics, jewellery, dentistry, medicine and coinage.
Sibanye is the largest individual producer of gold in South Africa and is one of the 10 largest global producers of the precious metal. It is also the 5th largest producer of PGMs in the world. Sibanye's Gold Division has four underground and surface gold operations in South Africa – the Cooke, Driefontein and Kloof operations in the West Witwatersrand Basin, and the Beatrix operation in the southern Free State. Apart from this, Sibanye also owns and manages significant extraction and processing facilities. Sibanye's Platinum Division includes, a 50% stake in the Kroondal operation in North West Province, South Africa, a 50% stake in the Mimosa platinum mine in Zimbabwe.
Details of the Sibanye – Stillwater deal
As per the agreement signed by both Companies, Sibanye had decided to acquire the entire outstanding shares of Stillwater and would pay $18 cash per share for each Stillwater's share. The transaction was valued at approximately R30 billion or US $2.2 billion. Gold One International Ltd and Public Investment Corporation Ltd are two majority shareholders of Sibanye who together hold approximately 29% stake in the Company. Both the majority shareholders have already given their approval for this deal.
As part of the transaction Sibanye will take over the assets of Stillwater which include two underground PGM mines - the Stillwater Mine and the East Boulder Mine as well as the Blitz organic growth Project and the Columbus Metallurgical Complex. Stillwater also owns the Marathon PGM-copper deposit in Ontario, Canada, and the Altar porphyry copper-gold deposit located in the San Juan province of Argentina.
Sibanye plans to finance the deal using mix of funds raised from debt and sale of equity in the merged Company. It has received a bridge loan commitment for $2.7 billion from Citibank and HSBC.
Benefits for Sibanye
Sibanye expects the acquisition to be accretive and result in various cost synergies, which will enhance its cash flow consequently increasing shareholder value in the long run. The acquisition represents a great opportunity for Sibanye to access high-quality, low-cost, PGM assets at a very opportune junction in its business cycle. The acquisition will add to Sibanye's portfolio of high grade reserves and provide a “mine-to-market” PGM business. Apart from this, Stillwater's sizeable recycling operation will provide Sibanye with a steady revenue source. The transaction will strengthen Sibanye's Platinum Division and its positioning globally.
At the close of trading session on Tuesday, April 25, 2017, Sibanye Gold's stock price slipped 3.33% to end the day at $8.14. A total volume of 4.39 million shares were exchanged during the session, which was above the 3-month average volume of 2.37 million shares. The Company's share price has soared 17.53% on a YTD basis. The Company's shares are trading at a PE ratio of 6.74 and have a dividend yield of 5.16%. The stock currently has a market cap of $1.96 billion.
Stillwater Mining's share price finished yesterday's trading session at $17.99, slightly up 0.50%. A total volume of 4.76 million shares exchanged hands, which was higher than the 3 months average volume of 2.27 million shares. The stock has surged 42.78% and 58.78% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have rallied 11.67%. At Tuesday's closing price, the stock's net capitalization stands at $2.17 billion.
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