Market commentators are becoming increasingly sceptical about Xstrata's attempts to buy Lonmin, the world's third-largest platinum producer.

The Swiss-based mining company made a £33-per-share proposal on 6th August which valued Lonmin at around $10 billion.

However, the approach was strongly rebuffed and London-listed Xstrata was given a 'put up or shut up' ultimatum under UK regulations, which expires next Thursday (2nd October).

With the deadline looming, analysts are suggesting that a formalised bid will not materialise, which could partially explain the fact that Lonmin's shares have slumped to as low as £22.17 in recent trading.

In addition, Xstrata may also be deterred by platinum prices, which have sunk sharply since July to just over $1,200 per ounce, compared to the $2,200 recorded earlier in the year.

As Michael Rawlinson, an analyst at Liberum Capital, told the FT: "The pricing [now] suggests a more than 50 per cent chance that it won't go ahead."

The view that Xstrata - which bought up a 10.7 per cent stake in Lonmin last month - will resist a formal offer due to the depressed share price was also echoed by Morgan Stanley analyst Tom Gidley-Kitchen.

However, he added: "There are few platinum assets available in the world. If they [Xstrata] let it go now, they may not get the chance again."



Source:

Xstrata move on Lonmin in doubt (23/09/08)
http://www.ft.com/cms/s/0/2a912b6e-89a1-11dd-8371-0000779fd18c.html