Madeleine Wackernagel
The markets were quick to give their verdict on a possible deal between Lonrho and Avmin: shares in holding company Anglovaal and Avmin slumped while Lonrho remained unchanged – going against the trend in a gaining sector.
The reason is not hard to find: analysts have seen it all before, only the dance partner has changed. And the impression left is of a Lonrho board clutching at straws now that the merger of its Duiker division with JCI’s Tavistock is increasingly unlikely.
“Once again there is no value in it for Lonrho,” says one analyst. “The board is simply trying to cover their own backs, not the shareholders’.”
Avmin, on the other hand, would gain an international listing, something it has been seeking for a while, and an indirect stake in Ashanti. It brings very little to the table: it cannot even take credit for the cash-rich Venetia diamond mine, which is managed by De Beers.
The deal as signalled would involve a share swap, which means a dilution of Lonrho’s share capital and would not be welcomed by shareholders.
As the week progressed, the shares languished as the markets awaited further news. That may not take long: indications are that Tiny Rowland is about to stir things up at Lonrho again. Rowland, who still owns a significant stake in the company, will call for a boardroom shake- up.
“What Lonrho needs is leadership, someone who actually has an interest in mining and in Africa, who can go out and get the deals. You only have to look at the big mining houses to see just how weak Lonrho’s board really is by comparison,” says one disgruntled investor.