Swiss mining giant Xstrata sought to expand its global reach with a 6.0-billion-euro bid for British platinum producer Lonmin termed "opportunistic and unwelcome" by its target. Xstrata, which has interests in copper, coal, ferrochrome, nickel, zinc, gold, cobalt, lead and silver, and is listed on both the London and Swiss stock exchanges offered 33 pounds (42 euros, 65 dollars) a share.
That amounted to 42 percent more than its closing price of 23.19 pounds on the London stock exchange on Tuesday, said a statement from Xstrata. The offer values the company at about five billion pounds (6.3 billion euros, 9.8 billion dollars). Xstrata already has an 8.03-percent stake in Lonmin, but the British company rejected the bid saying it had undervalued its business.
"The board of Lonmin notes the unsolicited, pre-conditional offer announced this morning by Xstrata for the entire issued share capital of Lonmin at 3,300 pence per share in cash," Lonmin said in a brief statement.
"This is an opportunistic and entirely unwelcome attempt to acquire Lonmin at a price which undervalues its unique assets." Xstrata said it was "uniquely positioned" to boost Lonmin's main operations in the Bushveld complex in South Africa due to its own business in the country such as platinum mining, smelting and refining.
"Lonmin's operations have consistently underperformed its own forecasts on expected platinum sales and have been subject to a declining sales and production profile at a time of robust prices," the Anglo-Swiss company said in a statement.
"Xstrata believes that Lonmin's operations are attractive, but that a significant transformation of operating and management practices are required to return Lonmin to its former growth trajectory over time," it added.
The news sent Lonmin shares rocketing by 46.9 percent to 3,407 pence in early afternoon trade in London - which was well above the offer price of 3,300 pence. Xstrata shares meanwhile were up 0.94 percent at 3,230 pence.
Xstrata earlier this year launched a 426-million-Australian-dollar (398-million-dollar, 256.4-million-euro) bid for Australian miner Indophil Resources NL, and recently bought another Australian group Jubilee Mines for 3.1 billion Australian dollars.
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