The Competition Appeal Court of South Africa dismissed an appeal by the Association of Mineworkers and Construction Union to halt the merger between Sibanye Gold Ltd., which trades as Sibanye-Stillwater, and Lonmin PLC, with the union saying the deal would lead to 13,344 retrenchments.
The deal is expected to become effective June 7 and values Lonmin at £226 million after the two companies agreed in late April to an increased share ratio. When first announced in December 2017, the deal valued Lonmin at about £285 million.
Sibanye and Lonmin said May 17 that the appeal court upheld the November 2018 decision by the Competition Tribunal to approve the merger subject to conditions, which included a six-month moratorium on retrenchments and a requirement for a final number on job losses due to discrepancies in papers filed before the Tribunal.
The court also introduced a new condition that clarifies a measure used as part of the investigation and implementation of certain mining projects.
Lonmin CEO Ben Magara recently said the company would reduce or delay job cuts due to a boost in revenue as a result of higher palladium prices and a weaker South African rand, with planned 2019 layoffs reduced to 4,000 from 5,300.
South Africa's Public Investor Corp. has a 30% interest in Lonmin and may present another hurdle for the merger with concerns about the value of the deal decreasing since it was announced due to a drop in the Sibanye stock price, Bloomberg News reported May 17, citing an anonymous source familiar with the matter.
The state-owned asset manager has sufficient shareholding to block the deal when it is considered by shareholders at a May 28 meeting.
If so, it would be a blow to both companies, with Sibanye and Lonmin both previously indicating to competition courts that Lonmin could cease to operate without the deal.
Sibanye-Stillwater CEO Neal Froneman said in the statement that the company believes the deal will enable a more sustainable future for the companies' platinum group metals operations.