Xstrata, Lonmin Mum On Fresh Bid

DIVERSIFIED miner Xstrata and platinum miner Lonmin yesterday declined to comment on growing market speculation that Xstrata was about to make a fresh takeover bid for the world's third-largest platinum producer.

Lonmin's shares rose 6,45% on the JSE, extending last week's 8% rally amid talk that the takeover, valued at about R42bn, could happen as early as next month. Media reports in the UK suggested that Xstrata CE Mick Davis had instructed advisers JPMorgan and Deutsche Bank to study a potential takeover of Lonmin.

This comes as Xstrata's proposed "merger of equals" with Anglo American is proving difficult, and talks about it look set to drag on for longer than expected.

Lonmin declined yesterday to comment "on the speculation", saying it would do so only once it had seen a formal offer from Xstrata. An Xstrata spokesman said the group "does not comment on market speculation or rumour".

The Observer in London reported at the weekend that a move on Lonmin was also likely to force Xstrata to abandon its ambition to merge with Anglo.

Anglo earlier this year spurned Xstrata's proposed merger.

But Xstrata's interest in launching a fresh bid for Lonmin may suggest that it has not given up its dream of becoming a significant platinum player, even if its Anglo bid fails to materialise.

The reports quoted analysts as saying a renewed bid for Lonmin could suggest that an Xstrata- Anglo deal was either dead or turning into a much longer game than expected.

That is because Lonmin, if acquired, would need to be divested in order for Xstrata and Anglo to merge. Anglo Platinum -- majority owned by Anglo American -- and Lonmin are the world's largest and third-largest miners of platinum and their control of more than half of the world's platinum production would raise competition problems.

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