North American Palladium sold for $1bn to Impala Palladium

Impala Palladium Holdings makes its first acquisition outside of Africa with a $1bn buy out of precious metal miner, North American Palladium

Impala Platinum Holdings ltd (Implats), based in South Africa, said on 7 October that it would buy North American Palladium Ltd, based in Canada for CA$1bn. The deal will be the first time Implats have made an acquisition outside of Africa.

Palladium is largely used in vehicle exhausts as a catalyst for the reduction and oxidisation of carbon emissions. The quantity used by the motor industry has vastly increased as rising pressure for manufacturers to meet stricter environmental regulations, mounts.

The deal has come as this driven demand has seen the price of Palladium increase to an all time high. Even as global sales of fossil fuelled vehicles decline, the expected shift towards tighter environmental regulations has seen the price rise to a record CA$2127 per ounce, a higher value than gold.

“(The acquisition) not only signals our confidence in the prevailing platinum group metals (PGM) market but it also expedites our transition to a high-level multinational producer,” Implats Chief Executive Officer Nick Muller said on a media call.

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Implats pursued North American Palladium for three years before the deal was secured. The agreement adds the Lac de Iles Mine in Thunder Bay, Ontario to the portfolio of Implats.

“It provides us with access to a well-established operational asset that employs bulk mining methods and occupies an attractive position on the industry cost curve,” Muller said.

Brookfield Business Partners LP will see a C$16 per share for the 81% of North American Palladium owned through the investment manager and its partners. Other partners involved in the Canadian company will be paid what the stock traded at on Friday’s closing, which will be CA$19.74 per share.

David Stewart, an analyst at GMP securities claimed that the North American Palladium was being acquired for a “steep discount” but as Brookfields approved the deal with 81% stake in the company, minority share holders will have less of a say.

Stewart explains, “Our disappointment stems not only from the implied 15 per cent discount but also from the timing.”

The deal is set to close by the end of 2019 but may spill over in early January 2020.