According to the report, Sibanye-Stillwater in December agreed to buy Lonmin in an all-share deal that values the company at £285m ($372,4m) creating the world’s second largest platinum producer.
“We are very pleased to have received the CMA’s clearance, which takes us one step closer to completion of the Offer,” read a joint statement from Lonmin and Sibanye chief executives Neal Froneman and Ben Magara.
“We remain excited about the proposed transaction, which we consider to be in the best interest of our stakeholders.”
They added: “We look forward to the combination of the businesses creating a leading mine-to-market player with enhanced scale and resources, able to compete more effectively.”
The proposed takeover still needs the backing of South African competition regulators, as well as the approval of UK judges and both companies’ shareholders.
Sibanye’s offer has been considered a rescue deal for Lonmin, which has suffered at the hands of weak platinum prices, costs related to the strengthening rand, a large labour force, and expensive deep-level mines.
The company has warned 12,600 jobs could be under threat over the next three years, with 3,700 job losses earmarked for this year, even if the Sibanye deal goes ahead.
Last week Lonmin reported a decline in its financial position with net cash falling to US$17mln at the end of March from US$63mln at the end of December, driven by restructuring costs.
Over before it starts?
Sibanye-Stillwater CEO Froneman has suggested Lonmin needs to be cash positive to follow through on the takeover, though it is not strictly a condition of the deal.
Analysts at Liberum said at the “current rate of cash burn Lonmin will be pushed into net debt before the year (end), scuppering the proposed merger before it has a chance to complete”.
However, Lonmin expects its cash position to improve by $47mln in the second half after an outage at one of its smelters.
Source: Proactive Investor