South African financial institutions are trying to force De Beers to rethink its $18-billion plan to go private, the Financial Times reported.
However, Anglo American, one of the leading players in the privatization plan, says it will not raise its offer, Reuters reported.
The financial institutions, which between them hold more than 15% of the company, enough to block the deal, are thought to include Old Mutual, Sanlam, Liberty, Standard Bank, and possibly Rand Merchant Bank, have appointed Barnard Jacobs Mellet to rally opposition to the plan by the world’s biggest diamond producer, the Financial Times reported. They are said to be unhappy with the money being offered.
BJM, a South African financial services group, told the publication its ”corporate finance advisory subsidiary had been mandated by certain clients to act on their behalf in relation to the proposals.”
De Beers’ proposals, announced in February, were also meant to unwind much-criticized cross holdings between it and sister company Anglo American.
The plans would give London-listed Anglo American and the Oppenheimer family a 45% stake each in De Beers. Debswana, a mining joint venture between De Beers and the Botswana government, would have 10%. The bidders would be able to take control without putting up new cash.
Anglo, the Oppenheimer family, and Debswana hold 40% of De Beers stock but as they are ”concert parties” they are effectively not able to vote, the publication reported. The BJM contingent, on the other hand, has a quarter of the remaining freely traded shares and therefore the power to block the deal.
James Allan, BJM Securities diamond analyst, is to advise clients on the proposals. His appointment is significant because he has been the most vociferous critic of the consortium’s proposal, arguing that it undervalues the company, the publication reported. Mr Allan values De Beers at more than $30-billion.
Anglo American responded on Wednesday by saying that the bidders would not bow to investor pressure to raise the offer, Reuters reported.
Anglo spokeswoman Anne Dunn told Reuters the offer-0.43 of an Anglo share, $14.40 in cash and a $1 De Beers dividend for every De Beers share-would be put to shareholders unchanged.
“That’s now firm and that will be the price in the scheme document and it cannot be changed,” she said.