Shareholders in Anglo American voted to approve the global miner’s $5.1 billion acquisition of an additional 40 percent stake in De Beers, bringing the company closer to sealing control of one of the world’s biggest diamond firms.
The deal, which was announced in November and had been widely expected to get the green light from investors, received 99.94 percent backing in a shareholder vote at a general meeting held in London on Friday.
Anglo expects to conclude the acquisition of the controlling stake in De Beers from South Africa’s Oppenheimer family in the second half of 2012. In addition to shareholder consent, the deal is also subject to regulatory and government approval.
Botswana, which currently holds 15 percent of De Beers, has a pro-rata pre-emption right over the family’s shares and the country, the world’s top diamond producer, is currently considering its position.
The smooth passage of Anglo’s De Beers acquisition so far is in contrast to its position in Chile where it could be facing a lengthy legal battle with Chilean state copper giant Codelco over a disputed asset option.
Under the proposed deal, Anglo will acquire an incremental interest in De Beers, by increasing its current 45 percent shareholding in the world’s leading diamond company to up to 85 percent.
Chief Executive of Anglo American, Cynthia Carroll, said the move is a ‘compelling proposition’ underpinned by the security of supply offered by a new 10-year sales agreement with the government of Botswana.
“This transaction is a unique opportunity for Anglo American to consolidate control of the world’s leading diamond company ÔÇô De Beers,” said Carrol who was in Gaborone for the historic signing of the sales agreement.
The move by Anglo follows on the heels of the signing of 10 year sales agreement that has provided De Beers with a steady supply of rough diamonds while Botswana will see DTC relocating from London to Gaborone in 2013.
Botswana will also sell independently 15 percent of Debswana production to take advantage of the changing diamond trade where producers want to target emerging demand from Asia and diamond auctions.
Writing recently in Diamond Intelligence Brief, Chaim Even-Zohar, an internationally renowned diamond expert, said Anglo American is “unhappy” with share that Botswana government is getting under the current arrangement.
Under the previous arrangement, De Beers remained with 18 percent of the proceeds after Botswana Government had taken its share, taxes and royalties.
“Though De Beers holds 50 percent of Debswana, it only gets 18 percent of its profits. The basic Botswana agreement is not good for Anglo American,” Chaim Even-Zohar quoted a senior finance official at Anglo American.