(Bloomberg) -- South Africa’s Public Investment Corp., whose 30% stake in Lonmin Plc is enough to block the miner’s planned takeover by Sibanye Gold Ltd., is concerned that the value of the all-share deal has been eroded, according to a person familiar with the matter.

The state-owned PIC is troubled by the drop in Sibanye’s stock since the deal was announced in December 2017 as the company battled to cut debt, said the person, who asked not to be identified as the deliberations are private. Africa’s biggest money manager is also struggling to value Sibanye’s gold operations after they were impacted by a five-month strike and the restructuring of its key mine, the person said.

The PIC has held talks with Sibanye and will make a final decision on whether to back the takeover on Monday, the person said. The deal requires the backing of 75% of Lonmin’s shareholders when they vote later this month.

The PIC doesn’t comment on investments before a decision has been made, said spokesman Deon Botha. Back in September 2018, the money manager supported the all-share deal, people familiar with the matter said at the time.

Mining’s Mr. Fix-It Brings Extinction of 100-Year-Old Lonmin

Lonmin agreed to an offer from rival platinum producer Sibanye after struggling through years of losses and being forced to seek debt-covenant waivers from lenders. Sibanye last month increased the share ratio it’s offering to Lonmin investors after metal prices rose, but the value of the deal remains lower than when it was first announced.

Sibanye won’t be raising its offer, said spokesman James Wellsted, who confirmed the company has discussed its plans to cut debt and the profitability of its gold operations with the PIC.

Recommending Deal

While a rally in metal prices and a weaker rand saw Lonmin return to profit in the six months through March, Chief Executive Officer Ben Magara is still recommending the deal, saying his company would otherwise lack capital to invest.

Lonmin believes that the terms of the transaction are in the best interests of shareholders, providing a solution to the challenges faced by the company, a spokeswoman said.

In addition to requiring shareholder approval, the deal is also facing a legal challenge from the Association of Mineworkers and Construction Union, which appealed the conditional approval granted by South Africa’s competition authorities.

To contact the reporter on this story: Felix Njini in Johannesburg at fnjini@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Dylan Griffiths, Nicholas Larkin

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