On 13 March 2018 second respondent (Sibanye) and third respondent (Lonmin) notified the seventh respondent (the Commission) of a proposed large merger in terms of which Sibanye intended to acquire the sole control of Lonmin. Sibanye proposed to implement the merger by issuing 0.967 shares in Sibanye in exchange for each ordinary share in Lonmin. This would mean that, subsequent to the merger, Lonmin's shareholders would hold 11,3% of the enlarged Sibanye entity. In its competition filling Sibanye submitted that access to Lonmin's smelting and refining facilities would make it a fully integrated Platinum Group Metals (PGM) producer in South Africa. Sibanye contended that there would be a potential realisation of synergies between contiguous Sibanye and Lonmin assets and opportunities to further progress current developmental projects within the Lonmin business.
In the merging parties filing, Lonmin set out its reasons for the merger: 'Lonmin has been suffering major challenges in recent years in respect of its debt structure, capital constraints and liquidity. As the headroom in the Lonmin group's tangible net worth had decreased, Lonmin's financial statements for the six months to 31 March 2017 disclosed the risk of a potential breach of Lonmin's debt covenant, which could reduce its liquidity. As at the end of Lonmin's 2017 financial year, the tangible net worth covenant was breached. Despite a series of restructuring initiatives, Lonmin has been unable to adequately restructure its debt so as to provide the liquidity required for the business to operate properly.'
The Commission conducted an extensive investigation of the proposed transaction which included a market analysis of the proposed transaction, a competitive assessment, and a public interest assessment. It concluded its competitive assessment by finding that the proposed transaction presented both a horizontal and a vertical overlap. After evaluating the pre and post merger market structure, it concluded that the proposed transaction was unlikely to substantially lessen competition in any of the separate PGM markets it had identified.