The bid for De Beers is being challenged

De Beers Chairman Nicky Oppenheimer will meet key shareholders in Cape Town this week amid speculation that a consortium led by his family and Anglo American may need to raise its offer for the South African gem miner, Reuters reported.

Oppenheimer’s visit to institutional shareholders precedes a May 4 meeting of De Beers shareholders which will vote on whether to accept the paper-and-cash offer, which now amounts to $16.4 billion, from DB Investments (DBI).

 

DBI is 45% owned by the Oppenheimers, 45% by Anglo American and 10 percent by De Beers’ Debswana diamond joint venture in Botswana.

 

Oppenheimer’s trip follows news last week that two key American shareholders-Brandes Investment Partners and Southeastern Asset Management-who control about 10% of De Beers stock, said the current DBI offer was insufficient.

 

Oppenheimer, in his capacity as chairman of Luxembourg-based DBI, is expected to meet senior executives with Old Mutual Asset Managers who own a vital 8% stake in De Beers that could potentially swing the vote.

 

“Nicky Oppenheimer will be in Cape Town tomorrow as part of the ongoing meeting with shareholders,” said De Beers spokeswoman Tracey Peterson told Reuters.

 

Spokesmen for Old Mutual Asset Managers in Cape Town and Anglo American in Johannesburg declined to comment on the proposed deal or planned meetings ahead of next month’s shareholder meeting, Reuters reported.

 

Brokers Barnard Jacobs Mellet, which is advising clients who are also expected to be against the current shape of the deal, were also unavailable to comment, Reuters reported.

 

Since DBI members already own 40% of De Beers stock through a series of Anglo-De Beers crossholdings, only 15% of shareholders are needed to block the deal.

 

De Beers in a note to its shareholders on April 10 recommended that they accept the DBI offer of 0.43 of an Anglo share for every De Beers share, plus $14.40 in cash and a dividend of $1.30 as “fair and reasonable”.  

Under the proposed deal, De Beers would become a private, de-listed firm owned by DBI while the series of investor-unfriendly crossholding between the two firms would be severed.