Northam puts out the welcome mat for suitors

The possible takeover bid for Northam Platinum by an unnamed bigger rival has prompted the group to invite anyone who’s interested to make their own offer, a process that could prompt the market to reasses its valuation of Northam.

The company said this week it had received an unsolicited “exploratory non-binding” approach from a major local producer, in the form of either an “asset-level transaction”, which implies one or more mines could change hands, or a “corporate transaction”, which would be a full takeover.

Impala Platinum (Implats) and Sibanye-Stillwater both denied having made the approach, leaving the market to speculate that the suitor is Valterra Platinum, which has a healthy balance sheet. The company has not responded to media queries.

Northam, chaired by former deputy finance minister Mcebisi Jonas, said it would now welcome proposals from other parties and set a deadline of December 1 for expressions of interest. More detailed discussions would be held in the new year.

“The main objective of this process is to ensure Northam’s long-term value and position in the industry are appropriately recognised and crystalised for the benefit of the company, its shareholders and other stakeholders,” Northam CEO Paul Dunne said at the group’s annual financial presentation on Friday.

He said such processes were common practice, citing Anglo American’s plan to sell diamond giant De Beers. “It is a process, it is quite common, you have the De Beers process. We have received an approach from a third party and we will run a process against that approach,” he said.

We have received an approach from a third party and we will run a process against that approach

Northam is executing a “Vision 2031″programme that sets annual sales targets of 1.5Moz for PGMs and more than 2Mt for chrome.

Northam is on a strong financial footing after glowing results for the year ended June. The group posted record metal production and sales figures and an operating profit of R14.2bn. It will deliver a R17 per share dividend to shareholders for the period.

The last major merger & acquisition activity in the platinum industry was the fierce tussle for Royal Bafokeng Platinum between Northam and Implats. Implats emerged victorious, acquiring RBPlat for about R10bn in 2023.

Dunne said that in mining, achieving goals quickly was critical. “The most valuable thing is time, and we have a proven track record of rapidly growing our production base to create the company we are today,” he said.

Zimele Mbanjwa, investment analyst at FNB Wealth & Investments, said Northam made an attractive takeover target. “It is one of the strongest independent producers with meaningful scale, long-life assets, established processing infrastructure, a growing chrome business and a visible production growth pipeline.”

Founded in 1977, Northam now produces 1Moz a year in PGMs from operations at Zondereinde in Limpopo, Booysendal on the Limpopo-Mpumalanga border, and Eland ini North West.

Mbanjwa said Valterra was probably the unnamed suitor, given that it had by far the strongest balance sheet in the sector.