Lonrho will press ahead with break-up

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The Independent Online
Lonrho's new chief executive Nick Morrell put a break-up of the mining to African trading conglomerate firmly back on the front burner yesterday. The proposed split had appeared to founder late last year after an EU investigation into the company was launched following the unexpected sale of former chief Dieter Bock's 19 per cent stake to Anglo American.

Announcing a 13 per cent rise in profits for the year to September, Mr Morrell, former head of the African trading arm, said yesterday: "Your board remains committed to the view that the best way of delivering maximum value for shareholders is to separate the mining and non-mining interests."

He said the exact form of the split was uncertain but would probably involve some disposals of businesses before a demerger of the remaining trading operations from the mining rump. The Lonrho name is expected to go with the trading arm and Mr Morrell would probably move to those mainly African businesses, as Mr Bock had indicated he would before unexpectedly stepping down as chief executive last October.

Lonrho first announced its intention to perform a three-way split last January, but since then has only achieved the sale of its Metropole hotels to Stakis. A planned flotation of the hotels arm, which also includes the Princess resort hotels in North America, was abandoned after advisers warned the market was losing interest after a flood of flotations in the sector.

The sale of the Princess chain, for which Lonrho is believed to be in final negotiation with Saudi businessman Prince Alwaleed bin Talal bin Abdulaziz, is crucial to any demerger. The expected proceeds of more than pounds 300m would be used to knock a big hole in debts.

Mr Morrell would not be drawn on which other businesses might be sold before a demerger. Lonrho's interests include sugar plantations, African car dealerships, hotels and a range of agricultural operations including cotton, timber, meat processing and brewing. In the UK it owns the Dutton Forshaw car dealerships and Cramlington Textiles.

Lonrho said continuing confusion over the status of its largest shareholder, Anglo American, would not divert it from its planned demerger. The EU is currently probing Anglo's acquisition of a 28 per cent stake in Lonrho, mainly from Dieter Bock, and has barred it from voting its shares pending its investigation into possible competition complications due to the two companies' interests in platinum.

Pre-tax profits rose 13 per cent during the year to September from pounds 151m to pounds 170m before exceptional items. Earnings per share were 34 per cent higher at 11.9p (8.9p) and a final maintained dividend of 3p was recommended, making a total for the year of 5.25p. Lonrho's shares, which have fallen from a high of 217p over the past year, closed 2p higher at 127p.