Anglo consortium raises bid for De Beers

A group trying to buy diamond giant De Beers raised its bid on Thursday in an attempt to overcome shareholder opposition to the deal, Reuters reported.

 

The consortium led by Anglo American Plc and South Africa’s wealthy Oppenheimer family added $2 per share to the bid, taking the price tag to nearly $18 billion.

 

Bowing to investor pressure, the consortium said that subject to financing, it would add about $800 million to the recommended bid, which it said would be considered final.

 

Anglo separately announced the sale of its entire stake in rival miner Billiton for $755 million in a move analysts said would easily fund its share of the De Beers offer, Reuters reported.

 

The original offer was 0.43 of an Anglo share and $14.40 in cash for every De Beers share. De Beers shareholders would also get Anglo’s dividend of $1.30 for every Anglo share received.

 

The deal is intended to unlock cross shareholdings between Anglo and De Beers and would see the rough diamond giant delisted and taken private.

 

Some of De Beers’ biggest shareholders – representing more than the 15% needed to block any deal – put pressure on Anglo and its partners to raise their bid at the eleventh hour, with the offer scheduled to be put to the vote on Friday.

 

South African assurer Old Mutual, which holds about 8%, said it would support the new offer, Reuters reported.

 

Fund manager Investec Asset Management, which has 2.5% of De Beers, also said it would accept the new bid, Reuters reported.

 

U.S.-based investors Brandes Investment Partners and Southeastern Asset Management – which have 6% and 3.8% of De Beers respectively – had said the offer was insufficient, Reuters reported.

 

Southeastern was not immediately available for comment on the higher bid and Brandes declined comment, saying it wanted more time to consider it before responding, Reuters reported.

 

South African financial advisers BJM said it had been instructed by institutions holding more than 5% of De Beers’ shares to request a special meeting to seek the unbundling of Anglo American shares held by the diamond miner, Reuters reported.

 

An unbundling would mean De Beers would stay listed.

 

Barnard Jacobs Mellet had opposed the original transaction, but told Reuters on Thursday it would not say how it would advise its clients on the new offer.

 

“We will go back to our clients and chat to them,” BJM Corporate Finance Managing Director Sam O’Leary told Reuters. “It’s a four percent increase — not a huge increase in anyone’s terms.”

De Beers said it had not yet received BJM’s request for the special meeting and recommended shareholders take the new offer.