Lonmin snubs Xstrata’s takeover bid
British platinum miner Lonmin yesterday reiterated its opposition to Xstrata’s hostile £5bn takeover bid, saying it failed to recognise the company’s potential for growth.
The South Africa-focused company, which last week received an indicative offer from the Anglo-Swiss mining group, told its shareholders to reject a formal offer, as it undervalued the firm’s business.
With a total mine life “in excess of 100 years”, Lonmin said it had “outstanding growth prospects” both in the short-term and in the long-term.
Lonmin chairman John Craven defined Xstrata’s proposal as an “opportunistic attempt to acquire the company’s assets cheaply to capitalise on the expected improvement”.
He added: “It comes immediately following the recent decline in the platinum price and the offer, if and when made, represents no more than the price Lonmin’s shares traded at as recently as six weeks ago.”
But some analysts have highlighted that the bid exploits Lonmin’s weak points, including operational difficulties in 2008, and this could put Xstrata in a stronger position.
Evolution Securities analyst Charles Cooper said: “Lonmin wants to see its potential fully recognised, taking into account its complete portfolio. They are going through a significant transition, so we should see in one year’s time how things are going to be. But ultimately a higher offer could change their mind.”
