ANGOLA has submitted an offer to acquire Anglo American’s majority stake in De Beers, joining a growing list of potential suitors that includes neighbouring Botswana and investor groups led by former De Beers executives.
State-owned Angolan gem producer Endiama presented “a concrete and well-defined proposal” to Anglo and is proceeding with subsequent actions, CEO José Manuel Ganga Júnior told Bloomberg News on Friday. He declined to provide further details, citing the confidential nature of discussions.
London-listed Anglo is divesting its 85% holding in the iconic diamond miner as part of a restructuring process that began 17 months ago. The formal sales process commenced in June, attracting bids from investor groups led by former De Beers executives Gareth Penny and Bruce Cleaver.
Botswana, where De Beers mines most of its gems and which holds a 15% stake, is also seeking to increase its shareholding to a controlling position. President Duma Boko has called the effort a matter of economic sovereignty.
Angola’s bid represents a shift from its earlier stated intention to acquire only a strategic minority stake and foster a partnership with Botswana. Angola overtook Botswana last year to become Africa’s leading diamond producer by value for the first time in two decades, according to the Kimberly Process.
Ganga Júnior told the newswire Endiama expected to reach an understanding with Botswana, though he declined to confirm whether discussions have occurred. “These are factors that, if we’re part of De Beers, will automatically allow us to take bigger leaps forward,” he said, citing the company’s proprietary mining technology and marketing systems.
Botswana, as an existing shareholder, has the right to match offers from outside parties.
Speaking on the potential sale of De Beers, Anglo CEO Duncan Wanblad said earlier this month that his firm was “not obligated” to take any buyer for De Beers. He added, however, that interest from a sub-Saharan countries underpinned the value of De Beers. “I think it’s really positive news that the government of Angola has expressed an interest in taking some ownership in the business,” said Wanblad.
“We’re taking all of this into the mix and working through what the best thing for the business is and what the best thing for Anglo and its shareholders are,” he said, adding that “the best thing for the Government of Botswana” was part of his thinking. Wanblad was speaking at the FT Metals & Mining Summit.
De Beers is valued by Anglo at about $5bn and while bids may not match that level, the transaction could still “surprise”, said UBS in a recent note.
“Even though market conditions are challenging with rough diamond prices depressed and De Beers cash flow negative, we still see potential for the sale of De Beers to positively surprise ($3-$4bn including deferred/contingent consideration),” the bank said. This compares to a sell-side consensus value of $2.5bn for De Beers.
