Lonrho stays silent on outcome of JCI merger

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The Independent Online
The outcome of merger talks between Lonrho and JCI, the first black- controlled South African mining house, should be known within a month or two, according to sources at the British-based mining to hotels group. But management is remaining silent on which way the discussions, revealed last month, will go. Nick Morrell, chief executive, said: "It is too early to say whether a merger is possible or likely. Talks are continuing, but there is no commitment."

Other groups, including rival South African mining groups Avmin and Gencor, have been rumoured as bidders for Lonrho, which has acknowledged that it has received more than one approach. However, it was playing down the seriousness of such contacts yesterday, saying it was in talks only with JCI. A spokesman said: "If someone makes an offer, then they have to consider it. It is not that they are soliciting offers."

The latest talks grew out of a plan put forward by JCI to merge the two group's South African coal interests, which lie next to each other, and developed into a proposal for a full-scale merger to create a company valued at around pounds 2bn. Analysts said they would not be surprised if other bidders were interested, given the need for Lonrho to gain more critical mass in its platinum operations. But one said Gencor at least probably had enough on its plate with its plans to float the Billiton non-precious metals interests in London.

Lonrho also appeared to dampen speculation that Anglo American, the giant mining house, would pick up the British group's one-third stake in Ashanti, the Ghanaian mining group, in exchange for reducing its shareholding from 28 per cent, as required by a European Commission cartel ruling.

Lonrho revealed that pre-tax profits had slumped from pounds 60m to pounds 22m in the six months to March, a 38 per cent fall when exceptional items were stripped out.

Investment column, page 24