Impala launches Afplats bid (February 16, 2007)

Impala Platinum (IMPUY-O, IPLA-L, IMP-J) has made a takeover bid for junior platinum developer African Platinum (APP-L, AFRPF-O), valuing the company at 297 million (US$579 million).

Implats is offering 0.55 per share, which is a premium of 52% over Afplats’s 30-day average price up to Feb. 13, when the two companies announced they were in discussions.

The deal is a friendly one with the board of Afplats locking up 1.3 million shares in the Implats offer. With three large institutional holders of Afplats shares — CGT Management, North Sound Legacy International, and North Sound Legacy Institutional — also locking up holdings, Implats has support from holders of 21% of Afplats shares. The funds have escape clauses if a superior bid appears, and IMplats gets a break fee of 2.8 million (US$5.5 million) if the deal falls through.

In a bid for Afplats, Impala would be seeking the Leeuwkop platinum project, on the western limb of the Bushveld igneous intrusion in South Africa. The two companies had already concluded an agreement that would have given Implats a 29.5% interest in Leeuwkop and Afplats’s other interests for US$148 million. Implats has said it will go through with that deal regardless of the outcome of the takeover bid.

Implats made a profit of R4.4 billion (US$608 million) on revenues of R14.9 billion (US$2.1 billion) in the six months ended Dec. 31. In the last half of 2005, it made US$280 million on revenues of US$1.2 billion. Higher realized prices for all its major products was the main reason for the increase in revenues, but production was up 9%. Group-wide cash production costs rose about 20%, to US$781 per oz.