South Africa’s Competition Commission has given the thumbs up to the proposed merger of Harmony Gold (HMY-N) and black empowerment company African Rainbow Minerals Gold.
The decision paves the way for the creation of South Africa’s largest gold producer, and the world’s fifth biggest, with annual production pegged at 4.1 million oz.
Under the planned merger, African Rainbow shareholders will receive two Harmony shares for every three shares held. Harmony will mint 63.7 million new shares to complete the transaction.
Also under the plan, African Rainbow will pay out a special dividend of R5 per share before the merger.
The plan is slated to go before each company’s shareholders in August. Pending their approval, the merger deal will be submitted for court sanctioning in early September.
The new Harmony will operate mines in all of South Africa’s major gold producing regions. Most of the anticipated synergies are expected in the Free State, which will be consolidated into a single operating unit.
Harmony and African Rainbow are no strangers, already equally partnered under the Free Gold joint venture. The two also jointly acquired Anglo American‘s (AAUK-Q) 34.5% stake in Anglovaal Mining (Avmin) for about R1.8 billion in early May.
Harmony recently agreed to acquire an 11.5% stake in gold miner Avgold (which is 42% owned by Avmin) from Anglo in exchange for about 6.9 million, or 3.8%, of its own shares. Subject to Anglo board approval, the deal will be completed by July 21.
Avgold’s main asset is the Target gold mine in the Free State, which is expected to churn out some 350,000 oz. of gold a year at a cash cost below US$180 per oz.
Anglo says it will turn around and sell the Harmony shares for around US$80 million.
Be the first to comment on "Harmony, African Rainbow merger okayed"