* Sibanye offers 2.66 rand per share
* Bid at 56 pct premium to Aquarius Monday's closing price
* Shares in Aquarius surge more than 40 pct (Adds analyst, CEO comment)
By Ed Stoddard
JOHANNESBURG, Oct 6 (Reuters) - South Africa's Sibanye Gold has offered $294 million to buy Aquarius Platinum , making its second big bet on a platinum sectorhammered by falling prices and rising costs.
The deal, announced on Tuesday, would put South Africa'sthird-largest gold producer by value into the global top fiveproducers of platinum group metals with annual output of morethan a million ounces.
It is the second big deal in the sector for Sibanye, whichbought the labour-intensive and costly Rustenburg operations ofAnglo American Platinum last month.
Sibanye, a spin-off of Gold Fields, is capitalisingon a platinum sector shake-up following an unprecedentedfive-month strike last year and weakening platinum prices thathave hit profitability and raised costs in much of the industry.
Under the terms of the deal, Sibanye offered 19.5 U.S.cents, or 2.66 rand, per Aquarius share, a 56 percent and 60.3percent premium to Monday's closing prices in Johannesburg andLondon respectively. The offer values Aquarius at $294 million.
Aquarius' shares in Johannesburg soared 40 percent at onepoint to 2.48 rand, slightly below the offer price, and was 34percent higher at 1230 GMT.
The stock was up 37 percent in London. Shares in Sibanyeadvanced over 10 percent to 19.74 rand.
The offer is backed by Aquarius' board but requiresshareholder approval.
In Aquarius, Sibanye would be taking on two low cost andmechanised mines in South Africa and Zimbabwe, which togetherholds the world's largest platinum reserves.
For Aquarius, the deal would allow its shareholders to exitthe industry whose gloomy outlook was compounded late last monthby disclosures Volkswagen AG falsified U.S. vehicleemission tests. Platinum was trading at $916.75 an ounceon Tuesday, having hit a near seven-year low of $888 on Friday.
SHAKING THINGS UP
"Everybody is saying prices cannot stay this low forever.Sibanye is shaking things up in the sector, they are takingadvantage where everybody is saying there is value but nobody isdoing anything about it," said Richard Hart, an analyst atArqaam Capital.
Sibanye Chief Executive Neal Froneman said he saw no jobcuts on the horizon at his new asset. Lay-offs arepolitically-sensitive in South Africa, where unions say up to22,000 mining jobs are current on the line and the unemploymentrate is over 25 percent.
There are about 1,500 employees at Aquarius' Mimosa mine inZimbabwe and 8,500 at the Kroondal operation in South Africa,where the hardline Association of Mineworkers and Constructionrecently ousted arch rival the National Union of Mineworkers asthe dominant union in the shafts.
Froneman said "we remain on the lookout" for assets but hedid not expect to acquire anything else in the short term with afocus now on "bedding the new acquisitions down."
Asked specifically if he wanted to snap up any assets fromrival Harmony Gold, which is battling to stayprofitable, Froneman said he was not interested.
He also said the company remained committed to its policy ofpaying a steady dividend of between 25 and 35 percent ofnormalised earnings.
Sibanye's gold assets are older mines that generate goodcash flow even at current prices and because of their age do notneed huge investments, freeing money for shareholders.
The group's production profile will now be about 60 percentgold and 40 percent platinum.
HSBC, which was the financial advisor to Sibanye, agreed toarrange a $300 million acquisition funding package.
($1 = 13.6725 rand) (Additional reporting Tiisetso Motsoeneng and Zandi Shabalala;Editing by James Macharia)
