Sibanye Gold (Sibanye) has entered into an agreement to acquire Stillwater Mining Company (Stillwater) for $2.2bn by purchasing its shares at $18 each in cash.
The transaction represents a 61% premium to Stillwater's volume-weighted average share price over the last one year before the announcement of the transaction.
It is also 25% more to its volume-weighted share price over the 30 trading days prior to the announcement.
The company claimed that the transaction is also 14 times that of IBES consensus 2017 EBITDA estimate.
Stillwater Mining board of directors have unanimously approved the transaction.
Stillwater Mining Company CEO Mick McMullen said: “This compelling all-cash transaction delivers immediate value to shareholders and appropriately recognises the value of Stillwater's high-grade and long-life assets and world-class metallurgical and PGM recycling complex, as well as Stillwater's potential for brown field expansions through the development of our Blitz and Lower East Boulder projects.
“This announcement is a testament to the significant operational and productivity improvements that Stillwater has achieved over the past several years.
"In particular, Sibanye recognises the world-class nature of our asset base, our operational excellence, our skilled team, and our strong commitment to the environment and workforce safety.
“Sibanye has indicated its commitment to maintaining and investing in Stillwater's Montana operations and will look to leverage our best practices, industry leading mining expertise and proven ability to drive improvements and efficiencies whilst improving safety across their entire business.”
The closing of this transaction is subject to certain conditions that include Sibanye and Stillwater shareholders approval, South African Reserve Bank consent and other customary conditions.
The closing is not constrained by any financial conditions.
Both the parties expect to close this transaction by the second quarter of next year.
Sibanye has received assurances from Citi and HSBC banks for a financing of $2.7bn, which would be used to fund the transaction and also to clear some debts of Stillwater.
For this transaction, BofA Merrill Lynch is acting as the financial advisor of Stillwater, while Jones Day and Holland & Hart are providing legal assistance.