Anglo American unveils plan to sell De Beers amidst takeover battle with BHP 

The announcement failed to impress the markets initially, with its share price dropping 3% to £26.28, below BHP’s revised offer valuing Anglo shares at £27.53 

London: In a strategic move to fend off a £34 billion takeover bid from its rival BHP, Anglo American has revealed plans to divest its diamond business, De Beers, as part of a broader restructuring initiative. 

The London-listed mining giant announced this radical strategy after rejecting BHP’s second unsolicited takeover offer. This plan includes dismantling various segments of the company, with the sale of De Beers, the world’s largest diamond miner, being a significant aspect. 

Founded in 1888 in South Africa by British mining magnate Cecil Rhodes and later partly owned by the Oppenheimer dynasty, De Beers became fully owned by Anglo American after the family sold its 40% stake in 2011. 

AI Cook, CEO of De Beers Group, expressed confidence in the company’s future despite the impending split, stating, “De Beers has led the diamond industry for more than a century… I am confident that we will remain the diamond leader for the next century.” 

Acknowledging the forthcoming changes, Cook emphasized De Beers’ commitment to delivering value for its stakeholders, including its partnerships with various countries. He also hinted at unveiling a new strategy for De Beers later in the month, emphasizing the enduring allure of diamonds and the potential to captivate new generations. 

Although De Beers has faced challenges due to declining sales amid economic slowdowns and the emergence of lab-created alternatives, Cook maintained optimism about the business’s prospects. He noted the interest from potential investors and the positive outlook for the diamond sector. 

The chief executive dismissed both approaches as “highly unattractive” because they undervalue the company’s long-term potential value. He also criticised BHP for the “disrespectful” timing of the approach before what is expected to be a highly contested general election in South Africa at the end of the month.  

However, Anglo American’s announcement failed to impress the markets initially, with its share price dropping 3% to £26.28 on Tuesday morning, below BHP’s revised offer valuing Anglo shares at £27.53. The second approach was up from approximately £25 in BHP’s original offer. Anglo’s CEO, Duncan Wanblad, dismissed both takeover attempts as “highly unattractive,” emphasizing the company’s long-term potential value. 

Courtesy: The Guardian