Professional Jeweler Archive: Oppenheimer Group Makes Offer to Take De Beers Private

April 2001


Oppenheimer Group Makes Offer to Take De Beers Private

The De Beers Group also announces pretax profits rose 72% to $1.67 billion in 2000

De Beers Investments – a private group consisting of the Oppenheimer family, Anglo American and Debswana – in February offered De Beers stockholders $43.17 per share in its bid to take De Beers from a public to private company.

If De Beers stock owners agree to sell to DBI, the Oppenheimer family and mining giant Anglo American would be the principal owners (45% each) of a newly private De Beers. Debswana, the joint mining company owned by De Beers and the government of Botswana, would have a 10% stake.

After the announcement, some De Beers stockholders grumbled the offer is too low, given De Beers potential future share price following restructuring. They also noted the 2000 pretax profits De Beers announced Feb. 15, which skyrocketed 72% to $1.67 billion. But a downturn in the global economy, especially in the U.S., could reduce De Beers’ sales by 10% this year, said Gary Ralfe, managing director of De Beers.

For stockholders, the offer represents a 31% premium over the price of De Beers shares on Jan. 31 and 69% over the average price of De Beers shares for the 12 previous months. At least three-quarters of outside shareholders – who own 60% of De Beers – must agree to sell for the DBI offer to succeed.

Private De Beers Would Remain “Open”

De Beers Chairman Nicky Oppenheimer, who would retain his position, said a private De Beers would remain open to the press and would continue to disclose sales figures and diamond sourcing information.

Tony Lea, finance director of Anglo American, agreed, telling The New York Times his group would insist on openness, especially considering the sensitive conflict diamond issue now bedeviling the diamond industry.

Oppenheimer and Ralfe also addressed the issue of De Beers’ legal status in the United States, where it’s still considered a monopoly and not allowed to do business. Ralfe said the change in administrations from Clinton to Bush is a positive sign. The Clinton White House rebuffed efforts De Beers made last year to begin talks with the U.S. Oppenheimer said the new private De Beers would continue to wrestle with the issue.

South African President Thabo Mbeki endorsed the DBI stock offer, telling the South African Parliament $2.9 billion in hard currency would flow into South Africa from the buyout if it’s approved, providing the country with important economic benefits.

– by Peggy Jo Donahue

Shown as DB Investments makes a $17.6 billion offer for De Beers (from left) are Gary Ralfe, managing director of De Beers; Nicky Oppenheimer, chairman of De Beers and DB Investments; and Louis Nchindo, managing director of Debswana.

Photo by Newscast

Copyright © 2001 by Bond Communications