Xstrata ditches Lonmin bid but blocks rivals

Anglo-Swiss miner Xstrata Plc dropped immediate plans for a $10 billion bid for No. 3 platinum producer Lonmin Plc on Wednesday but set the scene for a later deal by scooping up Lonmin shares as they fell.
Xstrata, the world's fifth biggest mining group by market value, said financial turmoil and difficult debt terms were behind the decision, but it increased its stake in Lonmin to 24.9 percent, making a rival bid very unlikely.
"Xstrata are not walking away, but have effectively locked out a competing bid at an attractive average-in price for their stake," analyst Michael Rawlinson of Liberum Capital said.
Xstrata, which already had a 10.7 percent Lonmin stake, bought 22.2 million shares at an average of 19.79 pounds each, well under its initial proposed offer of 33 pounds per share unveiled on August 6.
Xstrata built up its stake to the maximum allowed under UK takeover rules, which stipulate it cannot make a formal bid for Lonmin for six months unless it is agreed by the company.
After 12 months Xstrata is free to make a bid lower than the 33-pound-per-share proposed bid.
Lonmin's shares, which had already shed a third since Xstrata made its approach tumbled as much as 30 percent and were trading 16.6 percent weaker at 18.96 pounds by 7:37 a.m. EDT.
Xstrata shares, which had lost 46 percent since it made the approach, surged 7.6 percent to 18.46 pounds, compared to a 3.9 percent increase in the UK mining index.