Platinum producer Lonmin (LMI-L) has confirmed that it has been in “preliminary discussions” with a possible buyer, but did not identify the other party.
Lonmin shares, which had been trading just above 20 earlier in the week, came under some buying pressure on Wednesday. With the announcement near the middle of the London trading day the price shot to 28.60 before closing at 26.71.
A number of major companies have been mentioned as possible bidders for Lonmin. A successful bidder would have to swallow a market capitalization around 3.8 billion at current prices. Lonmin also has long-term debt of US$216 million in convertible bonds.
Swiss-based mining house Xstrata (XTA-L) has been widely touted as a possible buyer for Lonmin. Among the more intriguing suggestions floated by London and Johannesburg analysts were bids by Gold Fields (GFI-N, GOF-L) and Barrick Gold (ABX-T, ABX-N).