South African giant Impala Platinum Holdings (Implats) announced it will be acquiring North American Palladium Limited (NAP) in a deal worth USD 758 Mn.
The move according to Impala will help it reposition its portfolio and further strengthen its competitive position ” in line with its stated strategy by acquiring a palladium-rich, operating asset in an established mining jurisdiction”.
Though there are still some pending regulatory hurdles, NAP has approved the transaction and are yet to recommend its shareholders to support the acquisition deal.
Brookfield Business Partners L.P. is getting out of the palladium mining business since it is selling its 81 percent interest in North American Palladium to Impala. The South African platinum giant will also be acquiring 9 percent of NAP shares not held by Brookfield.
Transactions of the deal will be through a mix of existing cash of USD 288 Mn, capital raised through metal prepayment USD 120 Mn and a loan worth USD 350 Mn.
Implats CEO, Nico Muller said, “The ability to acquire NAP and deliver on its medium-term production plans and exploration potential is an exciting development for our Group. Ownership of NAP will accelerate our progress against a number of key strategic imperatives, and it is Implats’ view that the palladium market will remain in a structural deficit in the medium term, which should lend considerable support to stronger-for-longer pricing. The increase in rand PGM pricing, together with the step-change in operational momentum at Implats resulted in considerable free cash generation and a substantial strengthening of the Group’s balance sheet during FY2019.”
NAP President and CEO, Jim Gallagher commented, “This transaction delivers attractive value for our shareholders and reflects five years of hard work we have devoted to realise the potential of our assets.
Gallagher added that the company will benefit from greater access to technical, operational and financial resources by being a part of a larger company.
NAP will be delisted and become a wholly-owned subsidiary of Implats once the deal is complete.
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