One of the oldest and most colourful names on the London stock market is set to disappear, with a recommended offer for industrial group Lonrho.
The current Lonrho, whose operations include seafood production, hotels and a stake in FastJet, is a far cry from the business originally incorporated in 1909 as the London and Rhodesia Mining and Land company, but which came to prominence during the 30 year tenure of Tiny Rowland. Rowland, who began running the business in 1963, was adored by a legion of small shareholders, and fought a longstanding and ultimately unsuccessful battle with Mohammed Al Fayed for control of department store Harrods.
In Rowland's hands Lonrho moved from mining to hotels to textiles to newspapers (including the Observer), but some of the company's activities during Rowland's tenure were described as "the unacceptable face of capitalism" by then-prime minister Edward Heath.
Shortly before Rowland's death in 1998 - five years after he was ousted from the company - its mining assets were spun off as Lonmin, and the remainder became a mini-conglomerate focusing on Africa, keeping the Lonrho name.
It is the latter which is now the subject of the takeover. A company controlled by Swiss billionaire Thomas Schmidheiny and investor Rainer-Marc Frey has agreed a deal to buy Lonrho for £174.5m. Their investment vehicle FS Africa, which controls 19.9% of Lonrho, has offered 10.25p a share and has agreement from directors and shareholders representing another 18%.
In the market Lonrho shares have nearly doubled to 9.86p. Panmure Gordon analyst Damian McNeela said:
We see a counterbid as unlikely. FS Africa acknowledge the requirement for further capital investment in Lonrho, our key concern, to fund growth. The price reflects a 97% premium to last night's close and we would expect shareholders to welcome this all cash offer. We move our recommendation from sell to hold.
