SOUTH AFRICA/FILE: The world's oldest diamond dynasty is set to sell its share in De Beers in a deal which would end the family's direct links to the diamond business after almost a century

Record ID: 458211

  • Title: SOUTH AFRICA/FILE: The world's oldest diamond dynasty is set to sell its share in De Beers in a deal which would end the family's direct links to the diamond business after almost a century
  • Date: 5th November 2011
  • Summary: JOHANNESBURG, SOUTH AFRICA (NOVEMBER 4, 2011) (REUTERS) VARIOUS EXTERIORS OF HEADQUARTERS OF ANGLO AMERICAN MINING COMPANY VARIOUS OF DIAMONDS ON SALE IN JEWELLERY SHOP
  • Embargoed: 20th November 2011 12:00
  • Keywords:
  • Location: South Africa
  • Country: South Africa
  • Topics: Business,Industry
  • Reuters ID: LVADHRVC3C3S3644QRA8JSJSB6YG
  • Story Text: Global miner Anglo American is set to take control of diamond giant De Beers, buying out the Oppenheimer family in a 5.1 billion U.S. dollar deal thatthe dynasty's direct links to the diamond business after almost a century.
    Anglo has long been eyeing a deal to increase its 45 percent stake in unlisted De Beers -- which vies with Russia's Alrosa for the title of the world's largest diamond producer -- but Friday's (November 4) announcement caught the market by surprise and sent the miner's shares up almost four percent.
    The Oppenheimers have resisted Anglo's approaches for years and held on to their 40 percent stake, even through the aftermath of the 2008 crisis which left shareholders forced to inject cash into De Beers as the luxury market tumbled.
    It was unclear what prompted the family to change its mind, but the Oppenheimers indicated the decision to agree to Anglo's latest ouverture had taken into account a number of factors, including the need to diversify their investments.
    James Teeger, managing director of E. Oppenheimer & Son, the family holding company, said the decision had been "momentous" and hinged on an agreement on price -- long a point of difference between Anglo and the South African family.
    Anglo's motivation is a bigger share of De Beers in a booming market as China and India turn to diamond jewellery even in the face of an uncertain economic outlook, and a 10-year supply deal with Botswana in September proved a key catalyst, prompting Chairman John Parker to again approach the Oppenheimer family.
    Sources familiar with the negotiations said the talks had been "difficult" for the Oppenheimers, but the the time was felt to be right.
    Nicky Oppenheimer is currently De Beers chairman, and will remain in place at least until the deal closes. The family also owns a direct stake of just over 2 percent in Anglo and has no plans to sell.
    Anglo American Chief Executive Cynthia Carroll, who said the company had been working on the acquisition "for years", said the long-term fundamentals for the diamond industry had prompted the deal, along with security of supply underlined by the agreement with Botswana signed in September.
    De Beers posted a 55 percent jump in first-half earnings in July on the back of record sales and an unprecedented jump in prices, driven by China, India and the United States, still the world's largest consumer of diamond jewellery.
    De Beers, founded by Cecil Rhodes in the 19th century, controls about 40 percent of the world's rough diamond supply.
    Anglo has been a shareholder in De Beers for over eight decades and has been the company's largest shareholder since De Beers became a private company in 2001.
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