Journal of the Southern African Institute of Mining and Metallurgy
On-line version ISSN 2411-9717
Print version ISSN 0038-223X
OSAE, W.K.; FAUCONNIER, C.J. and YOUNGMAN, R.C.W. Webber. A value assessment of mergers and acquisitions in the South African mining industry-the Harmony ARMgold example. J. S. Afr. Inst. Min. Metall. [online]. 2011, vol.111, n.12, pp.857-869. ISSN 2411-9717.
A value assessment model which uses deal objectives, financial and non-financial indicators as a guide to assess value creation in mergers and acquisitions. The extent to which post- merger deal objectives are achieved and the potential benefits derived from mining deals that may not necessarily be financial of nature, but which are necessary to sustain and enhance future performance, were considered. The premerger and post-merger performances based on some financial indicators that reflect profitability for shareholders were also used. This value assessment model was used to assess four major deals that have occurred in the South African mining industry since 2003 as part of a postgraduate dissertation. In this paper, the Harmony and ARMgold merger is used as an example of how the model can be applied. The model's relevance and applicability can also serve as a guideline in developing a framework or holistic guideline in assessing whether mining BEE deals in South Africa create value.
Keywords : mining deals; mergers and acquisitions; value creation; holistic value assessment model; deal objectives; financial indicators; non-financial indicators.