South Africa's Lonmin rejects Xstrata's $10 billion hostile bid

06 August 2008

Mumbai: Lonmin Plc, the world's third-biggest platinum producer, has rejected an unsolicited $10 billion takeover offer by Anglo-Swiss mining group, Xstrata, saying the 33-pound per share offer undervalued the company.

South Africa-focused Lonmin, whose shares soared 51 per cent to a high of 35 pounds on Wednesday, rejected the cash bid.

''This is an opportunistic and entirely unwelcome attempt to acquire Lonmin at a price which undervalues its unique assets,'' the under-performing platinum miner  said.

The Xstrata offer is part of the miner's move to consolidate business as it diversifies industrial metals business from copper amid booming demand and soaring prices of metals.

The acquisitive Xstrata itself escaped the swoop of a wave of consolidation in the metals sector five months ago when a takeover attempt by Brazil's Vale failed.

Xstrata said it already holds an 8 per cent stake in Lonmin and plans to buy more in the open market.