South Africa’s Sibanye-Stillwater Buys Troubled Platinum Miner

South Africa’s Sibanye-Stillwater has agreed to buy Lonmin for approximately £285 million ($382 million) in an all-share deal that drove shares in the troubled London-listed platinum miner up by more than a fifth.

Lonmin, the world’s third biggest platinum producer, has been battling weak global platinum prices and soaring operating costs in South Africa, shrinking the Company’s market value by 98 percent in the past five years.

After the announcement, Lonmin’s shares jumped 23 percent, while shares in Sibanye-Stillwater, which will become the world’s second largest platinum producer on completion of the deal, fell five percent in Johannesburg.

Global platinum prices are trading around their lowest levels since early

2016, under pressure from bloated supply and declining demand from the automotive industry.

“The flexibility inherent in the larger regional PGM footprint will create a more robust business, better able to withstand volatile PGM prices and exchange rates,” Sibanye, Chief Executive Officer Neal Froneman said in a statement.

Under the offer, Lonmin shareholders would receive 0.967 new Sibanye-Stillwater shares for each Lonmin share, the firms said.

Following completion of the deal Lonmin shareholders would hold about 11.3 percent of the enlarged group.

Under Sibanye’s plans, Lonmin would put all of its older mines on care and maintenance, which means operations stop but they are kept in a condition to resume in future. The plan involves cutting 12,600 jobs in the next three years with a further 890 jobs at risk, a Sibanye presentation showed.