Lonmin have rejected a bid from Swiss mining group Xstrata saying the 33-pound per share cash offer undervalued the company."This is an opportunistic and entirely unwelcome attempt to acquire Lonmin at a price which undervalues its unique assets," the world's third-biggest platinum producer said in a statement.

Xstrata announced its intention to make a proposed cash offer for Lonmin, offering £33 per share for the platinum producer.

The firm believes that it has the successful track record to turn around the production figures of the business which has suffered from smelting problems and power shortages.

According to a statement from Xstrata, the £5 billion bid would establish it as the third largest producer of platinum.

"Xstrata believes that Lonmin's operations are attractive, but that a significant transformation of operating and management practices is required to return Lonmin to its former growth trajectory over time," a statement from Xstrata said.

Mick Davis, Chief Executive of Xstrata, said that the bid was the next step in the firm's strategy to develop its platinum business.

Xstrata has bought eight per cent of Lonmin and is offering £33 per share for a 42 per cent premium.

Any bid is subject to achieving regulatory clearance and it is not expected to be subject to the approval of Xstrata shareholders.

Source:

Lonmin rejects Xstrata bid as undervaluing firm
http://www.reuters.com/article/innovationNews/idUSWLA767120080806

Xstrata bids £5bn cash for rival miner Lonmin, 06/08/08
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article4468600.ece

Xstrata PLC - Proposed Cash Offer for Lonmin Plc, 06/08/08
Xstrata website - http://www.xstrata.com/