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Anglo American to acquire Oppenheimer family’s 40% interest in De Beers
The deal is for a total cash consideration of US$5.1 billion
By: Diamond World News Service
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Nov 5 2011 6:53PM
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Reference: 6461  

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Taking a big leap ahead, Anglo American has entered into an agreement to acquire 40 percent of the interest held by the Oppenheimer family in DB Investments and De Beers sa (“De Beers”). The Oppenheimer family’s said interests are represented by CHL and Centhold International Limited (“CIL”) as (“CHL Group”). The deal is for a total cash consideration of US$5.1 billion, subject to adjustment as provided for in the agreement. Nicky Oppenheimer, representing the Oppenheimer family interests, called this move “a momentous and difficult decision for the family which has been in the diamond industry for more than 100 years and part of De Beers for over 80 years”. After careful and deliberate consideration of the offer, and what is in the best interests of the family, we unanimously agreed to accept Anglo American’s offer. I am certain that Anglo American will provide strong support to Philippe Mellier and the De Beers management team.”

Under the terms of the existing shareholders’ agreement between Anglo American, CHL and the Government of the Republic of Botswana (GRB), the GRB has pre-emption rights in respect of the CHL Group’s interest in De Beers, enabling it to participate in the transaction and increase its interest in De Beers, on a pro rata basis, to up to 25 percent. And if GRB exercises its preemption rights in full, Anglo American, under the proposed transaction, would acquire 30 percent interest in De Beers, and as such its consideration payable to the CHL Group would be reduced proportionately. Anglo American currently holds 45 percent in De Beers and the acquisition would either take its stake to 85 percent (if it acquires 40 percent additionally) or 75 percent (if GRB exercises its preemption rights in full).

The proposed acquisition requires Anglo American shareholder approval and is subject to regulatory and government approvals and required third party consents (if any) and is expected to close in the second half of 2012.

Cynthia Carroll, Chief Executive of Anglo American, said: “This transaction is a unique opportunity for Anglo American to consolidate control of the world’s leading diamond company – De Beers. Underpinned by the security of supply offered by a new 10-year sales agreement with our partner, the Government of the Republic of Botswana, this forms a compelling proposition. I believe that the benefits brought by Anglo American’s scale, technical, operational and exploration expertise and financial resources, combined with the unquestionable leadership of De Beers’ business and iconic brand will enable De Beers to enhance its position across the diamond pipeline and capture the potential presented by a rapidly evolving diamond market.”

The Minister of Minerals, Energy, and Water Resources, Dr. Ponatshego H Kedikilwe, on behalf of the Republic of Botswana said: “We are grateful to the Oppenheimer family for their vision and contribution to the diamond industry and to Botswana and we will proudly take forward that legacy with Anglo American.”

Sir John Parker, Chairman of Anglo American, added: “The purchase of an incremental interest in De Beers is fully aligned with the Board’s strategic priorities. We look forward to increasing our involvement in the business and building strong links and relationships with De Beers’ Sightholders and partners.” The transaction is expected to be accretive to underlying earnings before depreciation and amortisation on fair value adjustments in the year of acquisition. Also, it does not alter the existing arrangements for the management of De Beers, including Mr N F Oppenheimer’s position as chairman, prior to completion. Mr P Mellier will continue as CEO of De Beers.

Anglo American has agreed to pay to CHL Group a break fee of $75 million in the event that the transaction does not close. In addition, it also agreed to pay capped additional consideration to the CHL Group in the event of a listing of De Beers in the two year period following closing of the transaction.

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