Brawl in the Bushveld - Implats seals control of Royal Bafokeng Platinum after PIC sells its stake

And the winner by TKO of the Brawl in the Bushveld is ... Implats! The battle took a longer-than-expected 18 months but the writing was on the wall after Northam threw in the towel in early April.  

Implats said in a statement that it had reached an agreement with the PIC — which manages the pensions of South African public servants on behalf of the Government Employees Pension Fund — to acquire its 9.26% stake in RBPlat.  

This brings Implats’ stake in the black-owned platinum group metals (PGMs) producer to over 55%. RBPlat will now become a subsidiary of Implats but will retain its JSE listing for now. 

For Implats, the acquisition adds profitable production to its profile from shallow, high-grade assets that lie next to its Rustenburg operations.  

This proximity does not just make sense in terms of synergies. It will allow Implats down the road to redeploy workers instead of laying them off as some of its adjacent Rustenburg operations reach the end of their road. Rustenburg has at times been a flashpoint of labour and social unrest, and those embers could be easily stirred.  

“The PIC believes the Implats offer will deliver financial value to its clients and will ensure long-term sustainability to PGM mining in the greater Rustenburg region. In addition, this transaction is envisaged to have a positive impact on regional employment as well as enable Implats to deliver on its social commitments,” the PIC said in a statement.  

With an eye on the social backdrop to the transaction, Implats will create a new community trust holding a 4% stake in the merged entity. An employee trust with a 4% stake in RBPlat will also be created. And a new empowerment structure, the Siyanda Consortium, will take a 5% stake in both Implats and RBPlat. Siyanda will fund this with equity and debt. 

“Siyanda SPIV [special purpose investment vehicle] shareholding will be funded through a combination of equity from Siyanda and debt funding on commercial terms from third parties, Implats and RBPlat with the majority of dividends used to repay debt and a trickle dividend flowing to the Siyanda SPIV beneficiaries,” Implats said.  

On top of these new empowerment vehicles, a 3% shareholding in Implats and RBPlat will be “warehoused for entrepreneurs, with a focus on women and youth entrepreneurs, from the Rustenburg community”, Implats said.  

Implats’ initial offer — which the PIC finally accepted — was one of R90 a share and 0.3 Implats shares per RBPlat share. When the offer was initially made in November 2021, that represented a 23% premium on RBPlat’s share price. Implats’ share price was around R136 on Wednesday, so that premium has evaporated. The combination of R90 plus 0.3 Implats shares — R47 — comes to R137.  

But RBPlat’s share price has risen by more than 500% over the past five years, so depending on when the PIC took its stake, it has almost certainly seen a return on its original investment, which would have included dividend flows.  

Implats made the offer 18 months ago with an eye to acquiring 100% of RBPlat. But then Northam unexpectedly threw its hat into the ring, snapping up more than 34% at R180 a share. A year later it announced a new offer to acquire all or a portion of the remaining RBPlat shares for R172.70 per share.  

Northam withdrew its bid about two months ago, citing a “Material Adverse Change” that had altered the landscape. 

Read more in Daily Maverick: Northam withdraws takeover offer for RBPlat, paving the way for Implats to acquire company 

Northam still has a stake of more than 34% in RBPlat, so it should see potentially rich dividend flows over the years if it retains its shares. It’s not the first prize it was aiming for but it has a significant stake in the business and its own operations are profitable and growing.  

There are not many PGM assets left in South Africa to snap up, so Implats’ takeover may be the last phase of consolidation in the sector for a while.  

It’s also perhaps telling that while South Africa accounts for more than 70% of the world’s known PGM reserves, this square-off was between domestic, JSE-listed companies, which it must be said have foreign investors. But foreign-based mining companies are keeping South African mining at arm’s length because of an investment environment that is simply awful. DM