The battle for the takeover of Lonrho, and effectively Ghana's Ashanti Goldfields rages on unabated:

By Charis Gresser

Lonrho, the conglomerate, decided to continue merger talks with JCI, the South African mining house, following a board meeting yesterday. Mr Nicholas Morrell, Lonrho's chief executive, is due to meet Mr Mzi Khumalo, JCI's chairman, today.

The talks about the ?2bn ($3.24bn) merger are a long way from resolution. "We're still at the stage of looking at the idea of a merger and what financial benefits it might produce," Lonrho said.

Lonrho and JCI, advised by Deutsche Morgan Grenfell and SBC Warburg respectively, are far from hammering out a common position on price or the value of assets. Other issues to be negotiated include the future of Lonrho Platinum and how large Lonrho's controlling stake will be.

The outcome of asset valuations, usually undertaken during the due diligence process, will be key to the talks progressing further.

Both companies trade at a discount to net asset value, although analysts reckon that Lonrho's shares suffer from a far larger discount of between 15 per cent and 20 per cent. Lonrho shares closed down 11/2p to 143p yesterday, against 190p a year ago.

Both companies have indicated they see clear commercial benefits from combining their respective mining assets, which include coal, gold and platinum. Anglo American, the South African mining giant which controls 27 per cent of Lonrho, hopes to swap its Lonrho shares for Lonrho's $400m stake in Ashanti Goldfields of Ghana. The talks have attracted opposition from Mr Tiny Rowland, Lonrho's former chief executive of 33 years, who remains its largest private shareholder.

Source: FT