Lonrho talks with JCI fail

Click to follow
The Independent Online
Lonrho yesterday confirmed the collapse of merger talks with JCI, the first black-controlled South African mining house, which would have created a $3bn (pounds 1.8bn) minerals group. Shares in the British-based hotels to cotton farming group fell 4p to 127.5p on the news.

No reason was given for the failure of the negotiations, first revealed last month, but reports from Johannesburg suggest that there were disagreements over ownership, management and financing. Last week, Roland "Tiny" Rowland, the former chief executive and still a large shareholder in the group, hit out against the merger as part of a campaign to enlist investor support against the deal. He said yesterday he was pleased to hear that it had now been called off.

"If they had gone ahead with a merger with JCI, I would have sued some of the directors.... It was a rotten deal for shareholders. Lonrho no longer has an effective board. They are receivers, there to sell off parts of the group."

Nick Morrell, Lonrho chief executive, refused to elaborate on why the talks foundered. "For a number of reasons these discussions have terminated. We may come back to them about coal, but we haven't decided yet," Mr Morrell said. The original talks with JCI were to discuss a possible merger of the two companies' coal interests, which lie next to each other in South Africa. Mr Morrell said it "makes very good sense" to put Lonrho's Duiker Mining business together with JCI's Tavistock Collieries operation, but added: "We would not be interested in selling Duiker."

The ending of the corporate merger talks will revive speculation that other South African mining groups, such as Anglo Vaal and Gencor, are interested in bidding for Lonrho. Mr Rowland said Anglo American, which owns around 27 per cent of Lonrho, should now bid at the 201p, a share price at which it bought shares from him. Anglo has been ordered by the European Commission to reduce its stake in Lonrho to below 10 per cent on competition grounds.

Mr Morrell said he had received no offers from anyone and he also refused to confirm reports that the group would now accelerate its break-up plans.