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Global miner Anglo American is set to take control of De Beers, buying out South Africa’s Oppenheimer family in a $5.1 billion deal that ends the dynasty’s direct links to the diamond business after almost a century.
The move comes just a few weeks after the diamond luxury jewellers opened its first outlet in Bahrain at Moda Mall and just days after president of the De Beers Institute of Diamonds, Andrew Coxon, held a seminar in the kingdom.
By 2015, China, India and the Gulf could overtake the United States as top diamond consumers, opening a huge market, and one increasingly suited to corporations, instead of the families and individuals whose links once dominated the diamond trade.
Anglo has long been eyeing a deal to increase its 45 per cent stake in unlisted De Beers – which vies with Russia’s Alrosa for the title of the world’s largest diamond producer – but Friday’s announcement caught the market by surprise and sent the miner’s shares up almost four per cent.
The Oppenheimers have resisted Anglo’s approaches for years and held on to their 40 per cent stake even through the aftermath of the 2008 crisis which left shareholders forced to inject cash into De Beers as the luxury market tumbled.
It was unclear what prompted the family to change its mind, but the Oppenheimers indicated the decision to agree to Anglo’s latest overture had taken into account a number of factors, including the need to diversify their investments.
James Teeger, managing director of E Oppenheimer & Son, the family holding company, said the decision had been ‘momentous’ and hinged on price – long a point of difference between Anglo and the South African family.
“After a long deliberation which took many factors into account, one of which obviously is diversification, the family decided to unanimously accept the offer,” he said.
Anglo’s motivation is a bigger share of De Beers in a booming market, as China and India turn to diamond jewellery even in the face of an uncertain economic outlook. A 10-year supply deal with producing country Botswana in September proved a key catalyst.
Anglo American chief executive Cynthia Carroll, who said the company had been working on the acquisition ‘for years’, said the long-term fundamentals for the diamond industry had prompted the deal. Improved security of supply, underlined by the agreement with Botswana signed in September, were another factor.
Anglo has been a shareholder in De Beers for over eight decades and has been the company’s largest shareholder since De Beers became a private company in 2001.
