De Beers Investments Offers $43 Per Share to De Beers Stockholders

February 16, 2001

De Beers Investments Offers $43 Per Share to De Beers Stockholders

De Beers Investments – a private group consisting of the Oppenheimer family, Anglo American and Debswana – yesterday offered existing 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 will be the principal owners (45% each) of the new private De Beers. Debswana, the joint mining effort co-owned by De Beers and the government of Botswana, would have a 10% stake (see related article).

Some De Beers stockholders grumbled yesterday the offered share price was 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% from $972 million to $1.67 billion. However, the downturn in the global economy, especially in America, would probably mean De Beers sales decreases of 10% in 2001, De Beers Managing Director Gary Ralfe said at a press conference.There are no guarantees De Beers shares would go higher.

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

De Beers Chairman Nicky Oppenheimer, who would continue to head the private company, said a new private De Beers would remain open to the press and would continue to disclose sales figures and other diamond sourcing information. His words were backed up by Tony Lea, Anglo American's finance director, who told The New York Times his group would insist on the 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 U.S., where it is still considered a monopoly. Ralfe said the change in administrations from Clinton to Bush was a positive sign, since 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 yesterday, telling the South African Parliament that $2.9 billion in hard currency would flow into South Africa from the buyout, providing the country with important economic benefits.

- by Peggy Jo Donahue