Anglo American Ends Oppenheimers’ De Beers Dynasty
By Jana Marais – Nov 4, 2011 5:32 AM ET
The transaction will increase Anglo’s stake in the world’s leading diamond miner to 85 percent, the London-based company said in a statement today.
Anglo American Plc (AAL) agreed to buy the Oppenheimer family’s 40 percent stake in De Beers for $5.1 billion in cash, ending the dynasty’s 80-year ownership in the world’s largest diamond miner.
The transaction will increase Anglo’s 45 percent stake in De Beers to as much as 85 percent, the London-based company said today in a statement. The deal will add to underlying earnings in the first year of acquisition, Anglo said.
“De Beers has the largest resources and reserves in the world today,” Cynthia Carroll, chief executive officer of Anglo, said in an interview with Francine Lacqua on Bloomberg Television’s “Countdown.” “The market is very, very strong. Demand will outstrip supply.”
Diamond miners are struggling to keep pace with growing consumption in emerging economies as older mines are exhausted and producers lack new discoveries. Supplies of rough diamonds, which are turned into polished gems, are forecast to remain flat in the next five years and will fail to match demand driven by China and India, according to RBC Capital Markets.
“We’re seeing in the first half of this year a tremendous increase in demand coming out of emerging countries as well as developed countries,” Carroll said. “In 2005, India and China represented about 8 percent of demand. By 2015, India, China and the Gulf will represent about close to 40 percent of demand.”