Amid all the doom and gloom that has marked business news in the past few weeks, we’ve finally had a deal that is one of the largest I’ve seen in a long while.
Sibanye Gold’s purchase of several Anglo American Platinum assets in Rustenburg - for R4.5 billion - made headlines, and I’m hardly surprised.
For starters, that’s a lot of moolah for an asset that isn’t mechanised and metal’s a commodity that has lost its shine recently, to put it mildly.
At the top end of the range - depending on numbers going forward - Sibanye could end up forking out as much as R20 billion.
I get that Neal Froneman, oft called “Mr Fixit”, wants to diversify out of gold; it’s hardly a profitable venture anymore. But I don’t quite see the big picture because platinum is very expensive to mine, unless he’s confident of an upside.
There are analysts who believe the deal is a good one for both sides of the equation. Time will tell.
What struck me most was not the value of the deal, or that Sibanye is moving onto the platinum stage, but that there was a deal at all.
We haven’t seen any decent M&A activity locally for quite some time - not since Vodacom started off what looked set to be a wave in the telecoms sector by bidding for Neotel, and Telkom offered to buy Business Connexion.
At the time, analysts reckoned there would be a host of other deals happening, with Cell C cropping up as a favourite buyout target. That talk has been swirling for quite a while and, while Telkom has indicated it may be keen, so far nothing has come of it.
Consolidation in the telecoms sector makes sense - you bulk up your base and get access to more assets and frequency faster, and maybe for cheaper, than a build-it-yourself solution would offer.
The mining sector doesn’t offer that sort of opportunity; it’s not like you can pick up a mineral reserve and pop it next to a shaft that has already been dug.
So I don’t expect much action from that sector, unless it’s totally opportunistic.
Manufacturing, on the other hand, could be an industry in which consolidation would make sense. Sure, there will be a lot of upfront expense, but with the right synergies, and real economies of scale, the long-term benefits would be savings without trimming - one hopes - jobs.
IT is another area in which M&A activity makes sense. Yet, apart from a handful of small deals by the likes of Adapt IT and EOH, there really isn’t much to write home about here. The last really big deal was Telkom’s bid for BCX, and that was a while ago.
Yes, there are competition concerns, there always are. But if consolidation will bolster the sector, create jobs and make the economy more competitive, these can be overcome.
So I have to wonder why the deals we are seeing happening are not internal, but are more focused on going offshore, like Discovery’s bulking up of its UK operations, and Aspen’s aims to enter the US.
If the growth prospects are not here, and are in developed economies - and Africa, of course - we really need to pull our socks up. Because if we don’t believe enough in SA to spend money here, how can we entice more companies like Volkswagen to come in and invest?
This country can’t just have the phenomenal find of Homo Naledi going for it, can it?
* Nicola Mawson is the online editor of Business Report. Follow her on Twitter @NicolaMawson or Business Report @busrep.
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