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Lonmin agrees to £285m takeover by Sibanye-Stillwater

Jon Yeomans
Under the terms of the agreement, Lonmin shareholders will receive 0.967 shares in the enlarged company for each Lonmin share they own - Roger Bull

Platinum miner Lonmin has agreed to be taken over by South African peer Sibanye-Stillwater in an all-share deal that values the company at £285m. 

Under the terms of the agreement, Lonmin shareholders will receive 0.967 shares in the enlarged company for each Lonmin share they own, giving them roughly 11pc of the new entity. The deal represents a 57pc premium to Lonmin's closing price of 63.8p yesterday, the companies said. 

The takeover has been recommended to shareholders by Lonmin's board, which said it was in the "best interests" of investors and "provides Lonmin with a comprehensive and sustainable solution to the adverse challenges it faces".

Lonmin's shares jumped 21pc on news of the deal.

The miner has struggled in recent years as the price of platinum has flatlined and the cost of running its deep mines in South Africa has soared. Lonmin was forced to tap shareholders for cash three times in six years, most recently in December 2015, when it raised £400m in a rights issue that saw public sector pension fund PIC take a 30pc stake.

Last month Lonmin's shares plunged after it said it would delay its full-year accounts while it undertook a review of its assets. 

The company is the third largest producer of platinum, which is used in catalytic converters in cars, and is mainly found in South Africa.

Sibanye-Stillwater owns gold and platinum mines across South Africa, Zimbabwe and the United States. It said the deal would create a "larger and more resilient company, with greater geographical and commodity diversification, that is better able to withstand short-term commodity price and foreign exchange volatility".

Ben Magara, chief executive of Lonmin, said: "Lonmin has an enviable mine-to-market business with great mining assets, projects and process technology and a resilient workforce. Despite this, Lonmin continues to be hamstrung by its capital structure and liquidity concerns.

"The combination with Sibanye-Stillwater provides a stronger platform for Lonmin Shareholders and other stakeholders to benefit from the long-term upside potential of an enlarged Sibanye-Stillwater Group with greater geographical and commodity diversification."

Should the takeover be accepted by shareholders in a vote, it would mark the end of an era for Lonmin, which, in its previous guise as Lonhro, was one of South Africa’s corporate giants. At its peak it owned 90 companies in 15 countries from mines to hotels, textiles and newspapers – including The Observer.

The mining business demerged in 1998 and was renamed Lonmin, while modern-day Lonhro has interests in logistics and infrastructure. Lonhro delisted from the London market in 2013.