EDITORIAL: End of platinum poker game

It’s annoying to see companies pull a material adverse change clause, a standard get-out-of-deal-free card in mergers & acquisitions (M&A) that allows buyers to withdraw from deals without penalty.  

But the leadership team of Royal Bafokeng Platinum (RBPlat) must have been pleased when Northam Platinum decided to drop out of the race with larger rival Impala Platinum (Implats) to buy RBPlat, coveted for its shallow high-grade resource. 

That is not to say the tug-of-war has not been good for RBPlat’s shareholders, who have been watching in delight over the past year as the share price of their company fared better than everything else in the industry. The stock is down just 12% over the past year, a least-bad performance compared with a 24%-50% slump suffered by top-tier rivals.  

Even so, the tussle had RBPlat in a shadow of uncertainty, placing CEO Steve Phiri in a tricky position to draw up long-term growth strategies and leading to a punishing brain drain. 

Perhaps the happiest bunch in the saga are the shareholders of Northam, the share price of which skyrocketed as much as 19% shortly after the announcement.  

Some investors in Northam have been reluctant to back the deal, rightly anxious that CEO Paul Dunne risked running a big tab on a transaction that lacks obvious strategic merits in comparison with Implats.