Stillwater Mining Company (NYSE:SWC)’s Deal To Sell To Sibanye Gold Ltd (NYSE:SBGL) for $2.2 Billion Now Under Probe

Stillwater Mining Company

While there is a nearly 23% in the offer Stillwater Mining Company (NYSE:SWC) has accepted to sell itself to Sibanye Gold Ltd (ADR) (NYSE:SBGL), not everyone is convinced the deal is sweet. Shareholder rights attorneys at Levi & Korsinsky have initiated a probe into the takeover deal, especially seeking to find out if the offer of $18 a share is fair to Stillwater shareholders.

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The deal values Stillwater at $2.2 billion. The price of $18 a share that Sibanye has agreed to pay for Stillwater is about 23% higher than the price at which shares of Stillwater closed on the day immediately before the deal was announced.

In buyout transactions, the board of the company selling itself is expected to seek out the maximum the value for shareholders. That is what Levi & Korsinsky attorneys will be looking into as they investigate the Stillwater-Sibanye. The law firm has requested investors who acquired shares of Stillwater before December 9 to contact it to discuss their rights in the probe.

Stillwater and its officers may face class action lawsuits if the probe Levi & Korsinsky by reveals that the board failed in performing its fiduciary duties.

Diversifying outside South Africa

As for Sibanye, the acquisition of Stillwater is an opportunity to expand into the U.S. as the company seeks to diversify its operations outside its home market of South Africa, where labor disruptions in the mining industry are sometimes frequent. But Sibanye is not ditching South Africa.

“This should not be seen as a first step in exiting South Africa,” said Sibanye CEO Neal Froneman.

The acquisition would further make Sibanye the third-largest palladium producer in the world. Stillwater mines platinum and palladium, it also recycles the metals and its recycling output has overtaken its mining output.

Platinum group of metals are used in industries such as auto to reduce engine emissions. Demand for the metals is expected to soar amid pressure on automakers to lower their carbon footprint.

Sibanye to raise $750 million

Sibanye is poised to lay hands on a company that already produces revenue and has impressive market network and recycling expertise. As such, Sibanye expects the acquisition to be accretive to its earnings. Sibanye is raising $750 million in equity and debt, possibly to fund the transaction.

Stillwater shares dipped 0.18% to $16.74 in the last session. The stock is up more than 95% since the beginning of the year.

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