Blockbuster $750 million deal as Impala acquires North American Palladium

(Kitco News) - Ontario miner North American Palladium (TSX: PDL) said today that it will be acquired by Impala Platinum Holdings for about C$1.0 billion (US$750 million).

Under the deal, North American Palladium will receive C$19.74 per NAP common share. The company said the price represents a premium of 15% to NAP's 30-day volume-weighted average price and 23% to NAP's 60-day volume-weighted average price on the Toronto Stock Exchange as of October 4, 2019.

The majority shareholder, Brookfield, will receive C$16.00 per North American Palladium common share in cash.

The deal is a big win for Brookfield. Earlier this decade North American Palladium was a distressed asset. The company made a US$130M debt deal in 2013 with Brookfield Asset Management. North American Palladium's management couldn't manage the turnaround, and Brookfield converted its debt to equity in 2015, appointed its own directors, and became the majority owner of NAP.

North American Palladium runs the Lac des Iles Mine, just northwest of Thunder Bay, Ontario. The operation has about 700 staff. It is North American the world's only pure-play palladium producer. The metal has been on a tear due to tightened emission requirements in non-diesel cars.

Impala Platinum (JSE:IMP) is based in South Africa and has 40,000 employees.

Jim Gallagher, President and Chief Executive Officer of North American Palladium, lauded the deal.

"This transaction delivers attractive value for our shareholders and rejects five years of hard work we have devoted to realize the potential of our assets. We have successfully established Lac des Iles Mine as one of Canada's largest, lowest-cost and safest underground mines, producing a metal that contributes to a cleaner global environment," said Gallagher.

"Our employees, suppliers, customers and community stakeholders can all join me in feeling tremendous pride at this pivotal moment in our company's history. By becoming a significant part of a larger, integrated global producer, we will benefit from greater access to technical, operational and financial resources with which to pursue our production, development and exploration objectives in Canada."

The boards of both companies approved the deal. The acquisition is subject to regulatory approval. North American Palladium tapped BMO Capital Markets to assess the fairness of the transaction.

By Michael McCrae

For Kitco News