Sibanye-Lonmin Deal Approved by South Africa With Limit on Job Cuts
(Bloomberg) -- South Africa’s Competition Tribunal approved Sibanye Gold Ltd.’s purchase of Lonmin Plc on the condition that the merged company doesn’t fire any workers at Lonmin’s operations in the six months after the deal closes.
- The decision represents one of the last remaining hurdles to the deal, first announced in December, although it will still be subject to votes by both sets of shareholders. It should come as a relief to Sibanye Chief Executive Officer Neal Froneman, after a particularly tough year for the company.
- The companies had planned to cut more than 13,000 jobs after the merger from aging shafts that are running out of profitable ore. Only 885 were as a result of the deal, but the tribunal said it’s not that clear cut.
- The regulator is placing a moratorium on job cuts for the six-month period so Sibanye can do an in-depth assessment of the operational requirements of Lonmin and consult with relevant parties including unions. Lonmin’s biggest union in the country had argued against the merger because of the job cut plans.
- The tribunal also required Sibanye to conduct studies on certain mine projects that could help save jobs and, depending on prevailing market conditions, to save 3,714 jobs by avoiding cuts or creating new ones.
- Sibanye issued a statement quoting Froneman as saying the terms are “fair, reasonable and in the best interest of all stakeholders.”
- The deal comes after Lonmin struggled through years of losses and was forced to seek debt covenant agreements with lenders. The challenges the producer faces as a standalone business remain, Chief Executive Officer Ben Magara said.
- “The transaction is in the best interests of Lonmin shareholders and all other stakeholders,” Magara said.
- Read the tribunal statement here
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