Lonmin Slips after No to Xstrata's 3300p Offer

The Evening Standard (London, England), August 7, 2008 | Go to article overview

Lonmin Slips after No to Xstrata's 3300p Offer


Byline: MICKEY CLARK

BID target Lonmin fell 20p to 3406p after telling shareholders to reject the unsolicited offer of 3300p a share from Xstrata. That may come as sweet music to the speculators, who have already decided the Anglo-Swiss mining company will have to cough up more cash if it wants Lonmin, but some institutions are taking a different view of the outcome.

Word is, some of Lonmin's big institutional shareholders were dribbling out stock into the market place this morning, happy to take a nice return on their investment. Some have even been prepared to accept the offer from Xstrata outright. One dealer commented: "Xstrata's offer is all cash and in these markets cash remains king." Meanwhile, Xstrata, up 39p at 3206p, has bought a further 4.1 million shares in Lonmin, stretching its stake to 10.7%.

Lonmin, the world's third-largest platinum producer, described Xstrata's offer as "wholly inadequate" and opportunistic.

Morgan Stanley says a successful acquisition of Lonmin would take Xstrata into the big league of platinum producers. It continues to rate Xstrata at overweight and says it remains the growth company among the bigger mining companies with a pipeline of inorganic growth options and opportunistic acquisitions providing wideranging choices for the future. ING reckons Xstrata will have to pay at least 3500p a share to win Lonmin.

Mining shares continued to underpin the rest of the market despite a recent softening of some commodity prices.

Eurasian Natural Resources put on 58p at 1075p, Antofagasta 24p at 566?p and Ferrexpo 11p to 277?p. Shares recovered from a nervous start with traders looking to exploit this week's new-found optimism among investors about prospects for the stock market.

The Bank of England monetary policy committee's decision to peg interest rates at 5% had been widely discounted.

The FTSE 100 rose 18.8 to 5504.9.

Interim results from Barclays were given the thumbs-up and the price rose 12p to 381p. …

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