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Britain's competition watchdog to look into Sibanye-Lonmin deal

The £285 million deal would create the world’s number two platinum producer.

Picture: Christa Eybers/EWN

BENGALURU - Britain’s Competition and Markets Authority (CMA) said on Tuesday it would examine whether a takeover by Sibanye-Stillwater of miner Lonmin, would lessen competition.

The £285 million deal would create the world’s number two platinum producer.

Precious metals miner Sibanye-Stillwater made an all-share offer for London-listed Lonmin in December. The companies said at the time that the transaction was subject to approval from shareholders and competition clearance in Britain, South Africa and possibly the European Union.

Cash-strapped Lonmin is the world's third-largest platinum producer and Sibanye-Stillwater is the fourth-largest.

A Lonmin spokeswoman said notification was filed to the South African Competition Commission on 13 March, followed by the CMA on 11 May.

Sibanye was not immediately available for comment.

"The longer the delay, the greater the potential for transaction failure, since the likelier it would be that Lonmin would be in net debt," Shore Capital analyst Yuen Low said.

"Even supposing the CMA approved the transaction, there could be delays to the transaction."

Sibanye has said it will not recommend the transaction to shareholders if Lonmin fails to retain a positive cash balance by the time the deal is scheduled to close in the second half of the year.

Credit waivers that prevented Lonmin from defaulting on its loans granted in January are dependent on the company's planned merger and the firm still faced liquidity challenges, its finance head said.

The South African central bank approved the transaction, Sibanye said on Tuesday.

In South Africa, 12,600 planned job cuts over the next three years will be the main hurdle for competition approval.

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