Lonrho Africa takeover close

THE BATTLE for Lonrho Africa reaches its climax next week when the predatory African investment fund Blakeney Management is tipped to win control of the ailing conglomerate.

Proxy votes are expected to swing in Blakeney's favour at an extraordinary general meeting on 10 December, where three Blakeney-backed non executives are expected to be elected to Lonrho Africa's board.

If the fund is successful, the head of Blakeney, Miles Morland, is likely to dispose of much of the hotch-potch mix of plantations, hotels, motors and property that Lonrho's founder, Tiny Rowland, spent a lifetime building up.

It is understood that Blakeney, the largest shareholder in Lonrho Africa with a 10 per cent stake, has secured the support of a number of American hedge funds accounting for up to 15 per cent of the quoted company's shares.

In addition, a number of UK institutions, including Fidelity and Morgan Stanley, are expected to come out in favour of Blakeney following a PIRC report due out tomorrow. Analysts agree this should be enough to give Blakeney a majority at the EGM.

The EGM was called by Blakeney after the dismal performance of Lonrho Africa after its demerger from its parent company, Lonrho, in April. Within five months shareholders saw their investments halve in value as the share price tumbled from 94p to 46p. Analysts are now slashing profit forecasts for Lonrho Africa, which achieved sales of pounds 554.6m last year.

Commenting on Lonrho Africa's performance, Mr Morland said: "I do not understand where the existing management is taking the company. Disposals have been largely non existent, as has investment in key assets. All we want to do is give the company a focus and revive shareholder value."

A company spokesman defended the existing management's record, arguing that difficult trading conditions across Africa had hampered the company's disposal programme.

Mr Morland, however, is likely to opt for asset stripping rather than piecemeal disposals. Blakeney wants to turn Lonrho Africa into a niche plantation operator, by selling off hotel and motor divisions over the next 18 months, and return the proceeds to shareholders as a dividend.

Analysts believe that this strategy should unlock hidden value and lift the share price to around pounds 1 per share.