No white knight for Lonmin, but room for price rise

By Eric Onstad

LONDON (Reuters) - Lonmin will struggle to attract a white knight to rescue it from a hostile $10 billion (5.6 billion pounds) offer, but even without a rival, suitor Xstrata could sweeten its bid to get a recommendation and quicken competition reviews.

Rumours have floated of possible rival bidders to Xstrata's 33 pounds per share proposal for the platinum miner, but nothing concrete has emerged.

Analysts say the main candidates are either embroiled in other bid battles, blocked by antitrust issues, or wary of operating risks in South Africa.

"I think the value would have to be screamingly cheap relative to the risks involved, so I think Xstrata pretty much has the field to itself," said analyst Nick Hatch at ING Bank.

"I think the most that (Lonmin CEO) Brad Mills and (Chairman) John Craven can do is hold out for a slightly higher price and I'd have thought 35 to 36 pounds is about as much as they're going to get."

The main thrust of a defence statement from world No. 3 platinum miner Lonmin on Tuesday was that Xstrata's bid was too low, not that a merger was a bad idea. Lonmin also said it was open to talks with Xstrata.

Xstrata must announce a firm intention to make a bid by October 2 or walk away for six months under a "put-up or shut-up" ruling issued by the UK Takeover Panel on Wednesday.

Acquisitive Xstrata (XTA.L) unveiled its all-cash proposed bid on August 6 and since then Lonmin shares have hovered slightly above 34 pounds, implying investors see potential for Xstrata to bump up its offer.