In a stunning and historic announcement that ends an 85-year-old dynasty, the Oppenheimer family has sold its 40 percent stake in De Beers to the diamond giant’s one-time sister company, Anglo American, for $5.1 billion.
The transaction will take nine to 12 months to close; during that time, current chairman Nicky Oppenheimer will retain his position. Afterward, one source knowledgeable about the deal tells JCK that a new chairman will be appointed, although recently appointed CEO Philippe Mellier will keep his post.
The transaction means that Anglo American now controls 85 percent of the company, with the remaining 15 percent held by the government of Botswana. The Botswana government has the right to increase its shareholding to 25 percent.
According to spokeswoman Lynette Gould, De Beers will remain a “separate legal entity,” with the governance of De Beers staying with its current board.
The knowledgeable source says that Anglo doesn’t see foresee any change in the current sightholder system. It is also likely to retain its current marketing initiatives, including the retail chain and Forevermark.
An Anglo American presentation touting the deal calls the diamond industry “highly attractive…with strong long-term fundamentals.”
It also says a “simplified ownership structure will enhance performance.”
“The plan is to build on De Beers’ strength and success,” said Anglo American CEO Cynthia Carroll in a video interview posted on the company’s website. “We expect that De Beers will benefit from Anglo’s scale and financial resources.”
Gould tells JCK that in a conference call following the announcement, Nicky Oppenheimer told the company’s staff that “if the family were ever to sell their stake in De Beers, Anglo American was always going to be its natural home, as they have been major shareholders in De Beers since 1926 and have a good knowledge of the diamond business.”
The Oppenheimer family has controlled De Beers since 1926, when Nicky Oppenheimer’s grandfather Sir Ernest, who also founded Anglo American, first took control of the company. Since then the chairmanship has passed to Ernest’s son Harry as well as Nicky.
“This has been a momentous and difficult decision, as my family has been in the diamond industry for more than 100 years and part of De Beers for over 80 years,” said Nicky Oppenheimer in a statement. “After careful and deliberate consideration of the offer, and what is in the best interests of the family, we unanimously agreed to accept Anglo American’s offer.”
This marks the latest in the series of big announcements from De Beers. In addition to the appointment of Mellier—the first outsider to take control of the company in its history—in September it announced a 10-year contract with Botswana that will move the Diamond Trading Company to Botswana.