Anglo American to take control of De Beers
LONDON, November 6, 2011 – 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.
Anglo has long been eyeing a deal to increase its 45 percent stake in unlisted De Beers, which vies with Russia’s Alrosa for the title of the world’s largest diamond producer.
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.
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 an agreement with Botswana signed in September, were another factor.
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.
“In China, only 15 years ago, there was virtually no culture of the diamond engagement rings,” Carroll told reporters. “Today more than half the brides in Beijing and Shanghai receive diamond engagement rings.”
De Beers posted a 55 percent jump in first-half earnings in July on the back of record sales and an unprecedented jump in prices, driven by China, India and the United States, still the world’s largest consumer of diamond jewellery.
Founded by British entrepreneur and adventurer Cecil Rhodes in the 19th century, De Beers controls about 40 percent of the world’s rough diamond supply.
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.