Anglo American Ends Oppenheimers’ De Beers Dynasty
By Jana Marais - Nov 4, 2011 5:32 AM ET
Bloomberg.com
Anglo American Plc (AAL) agreed to buy the Oppenheimer family’s 40 percent stake in De Beers for $5.1 billion in cash, ending the dynasty’s 80-year ownership in the world’s largest diamond miner.
The transaction will increase Anglo’s 45 percent stake in De Beers to as much as 85 percent, the London-based company said today in a statement. The deal will add to underlying earnings in the first year of acquisition, Anglo said.
“De Beers has the largest resources and reserves in the world today,” Cynthia Carroll, chief executive officer of Anglo, said in an interview with Francine Lacqua on Bloomberg Television’s “Countdown.” “The market is very, very strong. Demand will outstrip supply.”
Diamond miners are struggling to keep pace with growing consumption in emerging economies as older mines are exhausted and producers lack new discoveries. Supplies of rough diamonds, which are turned into polished gems, are forecast to remain flat in the next five years and will fail to match demand driven by China and India, according to RBC Capital Markets.
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Revenue Gains
De Beers, which mines diamonds by itself and in joint ventures in South Africa, Canada, Botswana and Namibia, reported a 33 percent jump in first-half sales to a record as demand in India and China drove up prices.
“The diamond operations have recently returned to profit with very nice profit margins,” Clinton Duncan, an analyst at Avior Research, said in a phone interview in Johannesburg. “The deal is not a bad idea. Anglo could now divest the operations to finally realize the value of De Beers. It could list De Beers in its own right.”
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Full story: http://www.bloomberg.com/news/2011-11-04/anglo-american-agrees-to-buy-de-beers-oppenheimer-stake-for-5-1-billion.html
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