De Beers' plan to go private (see related article) may now face a road block. A group of South African financial institutions that hold more than 15% of De Beers stock have hired a financial services group to advise them on De Beers' buyout proposal. The group of institutions hired South African stockbroker Barnard Jacobs Mellet Securities to represent their interests. James Allan, BJM Securities' diamond analyst, will advise the companies on the proposal, which is significant because Allan has voiced opposition to the De Beers proposal. He says it undervalues the company, the Financial Times reports.
In an advertisement appearing in South African newspapers, BJM said it doesn't believe the proposals are fair to De Beers minority stockholders, Reuters reports. Anglo American, the Oppenheimer family and Debswana hold 40% of De Beers stock, but because they are initiators of the buyout plan, they're unable to vote on the proposal. According to the Financial Times, that leaves the companies represented by BJM with at least 25% of the remaining freely traded shares and the power to block the deal if they vote against the proposal. Anglo American said today it would not bow under pressure from investors to raise the offer, Reuters reports.
- by Julia M. Duncan