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Sibanye gets U.S. security nod to buy Stillwater mines

The U.S. cleared the sale of the country’s sole provider of platinum and palladium to a miner whose biggest investor is Chinese, providing the first indication that the Trump administration’s tough talk on China won’t necessarily translate into blocking Beijing-linked deals.

Sibanye Gold Ltd.’s $2.2 billion deal to purchase Colorado-based Stillwater Mining Co. will go ahead after the companies received notice from the Committee on Foreign Investment in the U.S., known as CFIUS, that the tie-up posed no unresolved national security issues, Stillwater said Monday in a statement.

Sibanye also confirmed the news. “We are obviously very pleased to have received CFIUS approval and, now that all regulatory conditions have been met, look forward to the shareholder vote on 25 April 2017,” James Wellsted, a spokesman, said in an email Monday.

The transaction won approval despite President Donald Trump’s criticism of China’s trade practices. In addition to its Chinese ownership, Stillwater is the sole U.S. source of platinum and palladium, materials that the Defense Department regards as strategic. Its Montana operations are also about 200 miles (322 kilometers) from Malmstrom Air Force Base, which maintains and operates part of the country’s nuclear arsenal.

National Security

The approval by CFIUS, which has a mandate to protect U.S. national security, may have included a secret agreement, known as mitigation, to ensure supplies of the metals to U.S. military contractors, according to people familiar with the security reviews.

Stillwater didn’t disclose whether any conditions were placed on the deal, and spokesmen for Stillwater and Sibanye didn’t respond to requests for comment. CFIUS doesn’t comment on its reviews.

Stillwater rose 3.5 percent to $17.84 at 3:15 p.m. in New York.

The deal is among several pending U.S. takeovers by Chinese investors under review by CFIUS, which is led by the Treasury Department and includes officials from the Defense, Homeland Security and State departments. The panel is grappling with a record number of deals at a time when the Trump administration has yet to fill key positions.

‘Fully Committed’

One deal awaiting approval is for Lattice Semiconductor Corp., which has agreed to be sold to Canyon Bridge Capital Partners, a firm backed by Chinese investors. Lattice said in a securities filing in March that the deal was resubmitted to CFIUS after the 75-day review period expired without a decision. Lattice said the companies remained “fully committed” to the deal and were “actively engaged” with CFIUS.

The panel also is reviewing a pending takeover of money-transfer company MoneyGram International Inc. by Ant Financial Services Group, which was spun out from the Chinese e-commerce giant Alibaba Group Holding Ltd. On Sunday, Ant Financial raised its bid to $18 a share from $13.25. A rival to Ant Financial, Euronet Worldwide Inc., had offered $15.20 a share and warned Treasury Secretary Steve Mnuchin of the “significant” national security risks of an Ant Financial-MoneyGram deal.

Sibanye, based in South Africa, is about 20 percent owned by a Chinese consortium. That shareholder, Gold One Group Ltd., is owned by several private and state-linked companies including China Development Bank Corp., according to a document provided this year by Sibanye. Sibanye said last month that CFIUS wanted to undertake further investigation into the Stillwater sale after an initial review period that ended on Feb. 28.

Adding Stillwater’s two Montana mines would make Sibanye the world’s third-biggest palladium producer. Stillwater sells most of its output to a European refiner, which in turn sells to various companies, including U.S. manufacturers.

Both Stillwater and Sibanye have scheduled shareholder meetings on April 25 to vote on the proposed merger, Stillwater said in its statement. If successful, it will be the biggest takeover by a South African mining company since 2001, when a group including Anglo American Plc and the Oppenheimer family took control of De Beers.

–  This article was written by David McLaughlin and Paul Burkhardt and originally published on Bloomberg.com

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