De Beers Makes Highest Offer to Ashton

October 5, 2000

De Beers Makes Highest Offer to Ashton

Diamond giant De Beers raised its bid for control of the Australian diamond producer Ashton Mining Ltd. to 2.28 Australian dollars a share, a 45% increase from its original A$1.57 a share offer. The revised offer eliminates any conditions over how diamonds from Ashton's Argyle mine will be marketed. The offer is conditional upon 50.1% acceptance from Ashton's board and Australia's Foreign Investment Review Board approval. De Beers also extended the offer to Oct. 27.

With De Beers' new offer on the table, Ashton has recommended its shareholders accept the offer. "We are pleased De Beers has raised its offer," Ashton Chief Executive Doug Bailey told the Financial Times. "De Beers' revised offer recognizes the underlying value of Ashton and the strength of its position in the diamond market." According to the Wall Street Journal, Malaysia Mining Corp. said it will sell its 49.9% stake in Ashton to De Beers unless a higher offer is made.

Rio Tinto PLC, which has been in a bidding war with De Beers for control of Ashton, says it will respond in due course, the Journal reports. An increased offer from Rio Tinto has not been ruled out, but speculation is that De Beers' offer will remain the highest.

De Beers increased its offer after Rio Tinto raised its offer to A$1.85. Ashton refused De Beers' earlier offer when KPMG Corporate Finance conducted an independent assessment of Ashton and valued its Argyle mine at between A$2.23 and A$2.70 a share. The Argyle mine is the world's largest diamond producer by volume. It produces low-quality diamonds as well as pink diamonds.

- by Julia M. Duncan