Sibanye Gold’s (SBGL) two largest shareholders, Gold One International and Public Investment Corporation, have confirmed their support for Sibanye’s acquisition of Stillwater Mining. Combined, they hold 29.0% of Sibanye’s issued share capital.
The transaction is expected to close in the second quarter of 2017. The structure of the deal would entail forming of a US subsidiary of Sibanye, which will merge into Stillwater Mining (SWC). That will end the existence of a separate US subsidiary of Sibanye. Stillwater will remain a surviving corporation and will be a direct subsidiary of Sibanye.
After the acquisition closes, Stillwater will be delisted from the New York Stock Exchange.
Usually, these types of deals require a 50.0% plus one vote for approval from the acquiring company. However, since Sibanye is planning to do a rights issue next year, the required approval required from its shareholders is 75.0%.
There are also non-solicitation covenants with Stillwater. There’s a termination fee of 0.75% of the equity value and 1.5% if Sibanye defaults. Sibanye expects regulatory approvals in the first quarter of 2017. A shareholder vote will most likely happen in the second quarter. After the acquisition closes, Sibanye will proceed to a rights offering and then replace the bridge with a bond issue on the debt side.
In the next part, we’ll look at the deal’s financing structure.