Amplats plunges as Anglo American dumps shares

Anglo American Platinum fell after Anglo American sold discounted shares in the South African firm as the parent company began to reduce its controlling stake ahead of a full exit. 

The move by Anglo, which is planning to separate so-called Amplats as part of a drastic restructuring plan, shows the company is keen to demonstrate progress to investors.

But it also highlights the potential to leak value as the mining giant simplifies its business.

The 13.94 million shares were sold at R515 apiece, raising R7.2 billion, London-listed Anglo said in a statement on Wednesday. That represented about 5.3% of Amplats’s total issued ordinary shares.

Amplats shares were down as much as 9.2% as trading opened in Johannesburg, where Anglo’s platinum-group metals subsidiary is listed. That’s the largest drop since April. 

The sale — at a 20% discount to the 30-day average share price — “may signal the extent of the value leakage in the restructuring process,” Bloomberg Intelligence analysts Grant Sporre and Alon Olsha wrote in a note. 

Anglo announced plans to exit its majority interest in Amplats in May as part of a wider restructuring plan unveiled in response to BHP Group’s unsolicited $49 billion takeover proposal.

Anglo rebuffed the approach partly because it deemed proposals to exit Amplats and Kumba Iron Ore before a takeover could proceed as too complicated.

The sale on Tuesday cut the number of Amplats shares to be distributed among Anglo shareholders and thus reduced so-called flowback — referring to investors offloading shares obtained through a merger or spinoff, for example, because their mandates don’t allow them to hold a stock.