Newspaper article The Evening Standard (London, England)

Xstrata Looking Set to Ditch Its Tilt at Lonmin

Newspaper article The Evening Standard (London, England)

Xstrata Looking Set to Ditch Its Tilt at Lonmin

Article excerpt

Byline: MICKEY CLARK

The odds on Anglo-Swiss mining giant Xstrata going ahead with its ?5 billion bid for Lonmin appear to be lengthen-ing by the day, warn traders.

Shares of Lonmin rallied 69p to 2998p along with the rest of the mining sector today, but they continue to trade at a significant discount to Xstratas offer of 3300p a share. Even the speculators concede that Xstratas offer is now look-ing exceedingly generous following the news that Aquarius Platinum, up 26?p at 414?p, has pulled out of the bidding for Lonmin.

Liberum Capital says there is now lit-tle chance of a new white knight, such as BHP Billiton, up 67p at 1472p, emerg-ing. It reckons the chances of Xstrata, 126p dearer at 2401p, walking away from its deal are increasing as market condi-tions continue to deteriorate. It will be anxious not to be seen to be paying over the odds. The broker estimates that Lonmin is already discounting a 30% to 40% chance that Xstrata will walk away. Liberum says the best-case scenario is where Lonmins share price falls to its pre-bid price of 2321p.

The price of platinum has dropped 28% since Xstrata first made its move and shares of its bigger rival Impala have fallen 24% to reflect this. Another major platinum player, Amplats, is down nearer 30%. Liberum reckons Xstrata looks a much better bet for investors. Other miners to make headway included Rio Tinto, up 199p at 4357p, Anglo-American, 156p to 2464p, and Eurasian Natural Resources, 4p to 709p.

The rally by miners, following their worst monthly performance in 11 years, helped pull the rest of the market up by its bootlaces. But opening falls on Wall Street this afternoon left London trading below its best levels with the FTSE 100 paring back its lead to 41.2 to 5359.6.

US retail sales fell for the second month in a row during August and the Producer Price Index suffered its big-gest drop in almost two years, leaving the Dow off 101 at 11,332. …

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