Mining giant Anglo-American PLC is interested in buying De Beers, the world’s largest diamond company. De Beers alerted the world about the buyout talks on Thursday through a press release.
A complex web of stock holdings already links the two companies, with each owning about one-third of the other.
The South Africa-based Oppenheimer family owns significant interests in both companies.
In the brief statement Thursday, De Beers said a consortium led by Anglo-American and the Oppenheimers, had approached it to discuss a possible offer for the company.
Debswana, a diamond company jointly owned by De Beers and the diamond-rich country of Botswana, owns 10% of the consortium.
Anglo-American has interests in gold, coal, and strategic metals. A merger with De Beers would make the combined company the biggest mining group in the world.
The proposed deal would involve a mixture of cash and stock.
Analysts told Reuters that the deal would value De Beers at $16 billion.
A buyout would untangle the companies’ crossholdings of stock, a situation Anglo-American Chairman Tony Trahar had promised to resolve.
The ”cautionary announcement” that De Beers released Thursday reads:
”Linked unit holders of De Beers are advised that De Beers has received an approach from a consortium comprising Central Holdings Limited (the Oppenheimer family holding company) (45%), Anglo American plc (45%) and Debswana Diamond Company (Proprietary) Limited (10%), a joint venture between De Beers and the Government of the Republic of Botswana. Detailed discussions between De Beers and these parties are taking place which may lead to a proposal being put to the holders of De Beers linked units. The proposal could involve an offer for all of De Beers linked units and a distribution of the Anglo American shares held by De Beers to linked unit holders that may realise an aggregate value of around US$40 per De Beers linked unit based on the current price of Anglo American shares.”
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