De Beers Australia Holdings announced Tuesday it will seek the approval of the Australian Securities and Investments Commission to withdraw its takeover bid for Ashton Mining, the Australian diamond producer.
The decision comes after Rio Tinto, an Anglo-Australian mining group, acquired 49.72% of Ashton's stock from Malaysia Mining Corp. Rio Tinto now controls 51.89% of Ashton shares, and De Beers says its bid for Ashton can no longer be successful. According to a company press release, "De Beers believes the withdrawal of its bid will provide Ashton shareholders and the Ashton board with clarity on the status of De Beers' offer and adequate opportunity to effect their investment decisions."
Until last week, De Beers was the expected winner in the battle for control of Ashton and its 40.1% stake in the Argyle diamond mine, an Australian mine that produces small affordable diamonds. De Beers had topped Rio Tinto's highest bid with a $2.28 Australian a share offer, and Ashton's board had suggested its shareholders sell to De Beers. However, De Beers hit a snag with Australian regulators, and Rio Tinto jumped in with a new A$2.20 a share offer and secured a deal with Malaysia Mining to buy its entire stake in Ashton.
- by Julia M. Duncan