Govt to weighoption on its De Beers' stake

Brian Benza
Staff Writer | Monday November 7, 2011 00:00

This follows last week's announcement that Anglo American had agreed to buy the Oppenheimer family's 40 percent stake in diamond miner De Beers for $5.1 billion (P36.5 billion) in cash, potentially raising its ownership of the diamond miner to 85 percent.

Botswana, which currently holds a 15-percent stake in De Beers, has a pre-emption right over the Oppenheimer family's shares that, if exercised, would lift the government's ownership to 25 percent. Says a statement from the Ministry of Minerals, Energy and Water Resources:

'Under the terms of the existing shareholder agreement, the Government of the Republic of Botswana has pre-emption rights with respect to the Oppenheimer's Central Holding Limited interest in De Beers, enabling government to participate in the transaction and to increase its own interest in De Beers, on a pro rata basis, up to 25 percent.

'This option will be explored in the coming months. The Government of the Republic of Botswana appreciates the fact that Anglo American has had a long standing stake in De Beers both historically and currently as the major shareholder in the company.'

If Botswana chose to exercise the right, it would reduce Anglo's stake to 75 percent and simultaneously decrease the $5.1 billion-buyout price. Botswana had until the transaction closing date in the second half of 2012 to decide.

The statement says Botswana does not anticipate that the buyout deal will have any significant impact on its recently signed sales agreement with De Beers. It continues:

'The government would further observe that the transaction does not in any way alter the existing arrangement for the management of De Beers, including Nicky Oppenheimer's position as Chairman, prior to its completion, and that Philippe Mellier will also continue as CEO of De Beers.

'The government, furthermore, wishes to observe that it does not anticipate that today's announced transaction will have any significant impact on its recently signed sales agreement with De Beers.'

After over a year of negotiations, government recently signed a 10-year diamond sales and marketing agreement with De Beers.