De Beers urges North American investors to accept sale

De Beers managing director Gary Ralfe on Monday urged North American stakeholders to accept $43.17 a share for their stock in an agreed deal which would take the 100-year-old diamond firm private, Reuters reported.

“We believe that…these transactions would unlock value for the De Beers shareholders,” Ralfe told a sold-out luncheon at a Canadian mining and metals convention, noting that an independent directors’ committee had recommended the deal.

A team of senior De Beers executives, including Ralfe, are using a three-day Prospectors and Developers Association of Canada (PDAC) conference in Toronto to promote the agreed deal to institutional backers.

A consortium led by Anglo American and South Africa’s billionaire Oppenheimer family wants to offer $43.17 for each De Beers share in an $18 billion transaction that would end a series of cross-holdings between De Beers and Anglo.

De Beers will become an associate company of London-listed Anglo, but day-to-day operations will be run by the Oppenheimers, whose private fortune is estimated at about $3 billion, Reuters reported.

The plan would unbundle De Beer’s $10 billion 35% holding in Anglo American. For the balance of the De Beers’ diamond business, directors have negotiated a price of $8.3 billion.

Ralfe said the transaction, which will be put to a vote in May or June, would not set the South African firm back as a diamond producer.

“De Beers will remain dedicated to maintaining its role as the world’s leading diamond company,” Ralfe said of the company, which controls about 65% of the rough diamond market.

Ralfe’s rare visit to Canada is also a public relations shot for the diamond giant in a country still emerging as a big diamond producer.

It is 10 years since Canadian geologist Chuck Fipke found diamonds in the remote Northwest Territories.

De Beers acquired its first significant Canadian diamond asset, the Snap Lake project in the Northwest Territories, last year in a hostile takeover of Winspear Diamonds.

The project is Canada’s first underground diamond mine and De Beers’ first mine outside southern Africa. The company now faces a lengthy permission process before it can develop Snap Lake.