How Is the Sibanye-Stillwater Deal Structured?



Deal approval

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.

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Transaction timeline

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.

Deal conditions

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.

Precious metal miners (GDX) such as Kinross Gold (KGC), Newmont Mining (NEM), and Goldcorp (GG) have also made acquisitions in the past and are in the process of integrating those assets.

In the next part, we’ll look at the deal’s financing structure.


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