something rotten here

I may be naïve when it comes to the law, but seems to me something rotten is going on and the market has not been fully informed.
Two points:
1. The press today reports that Lion sold because Xstrata told them that they intended to build a 20% blocking stake in Indophil, hence casting doubt on the Stanhill bid. If that is correct, then why is this not insider trading as Lion had information about Xstrata that the market didn’t?
2. If not correct, how can Lion be deemed to be acting in the best interests of shareholders by selling at 11 cents below a legitimate and recommended (by Indophil) bid?