Anglo American acquiring De Beers stake from Oppenheimer family

The real big South African (?) news today is the sale of the Oppenheimer stake in De Beers to Anglo American. Like the dudes said next door, didn't they just unbundle that? That was over a decade ago, for a market that has a three week memory (and does not remember the last nonfarm payrolls number), this is almost new news. Download the full presentation here from the Anglo website -> UNIQUE OPPORTUNITY TO CONSOLIDATE THE WORLD'S LEADING DIAMOND COMPANY.

Don't shout with the capitals guys! Cynthia Carroll was interviewed by Bloomberg this morning. She was talking about the amazing fundamentals for diamonds. No major diamond mines have been discovered for literally decades she said. She says they are not too worried about the demand side, it looks very strong, mainly been driven by the emerging markets. She sees Indian diamond demand growing by 20-30 percent per annum. And to pay for it, the most important part, self funded is what Carroll said. Some more debt no doubt. On balance good for both parties, good for Anglo to have a real go at the diamond business, more of it, and good for the Oppenheimer's to exit. They (the O's) might say in the statement:

"This has been a momentous and difficult decision as my family has been in the diamond industry for more than 100 years and part of De Beers for over 80 years. After careful and deliberate consideration of the offer, and what is in the best interests of the family, we unanimously agreed to accept Anglo American`s offer. Anglo American is the natural home for our stake as they have been major shareholders in De Beers since 1926 and have a deep knowledge of the diamond business."

Yeah, yeah, and I love the smell of money in the morning. I suppose if I were in the families boots, being the scrutiny of the supposed youth of the country, I would have felt anxious too. Question is, what are they (the O's) going to do with the money? Anyway, who cares, good for them to have cashed it in and been patient. I like the medium to long term fundamentals for luxury goods and by extension diamonds, but would prefer to hold our entry into that point in Richemont, the luxury goods retailers.

Wait a second, before you think that Anglo would acquire all of the Oppenheimer stake, that might (or probably won't) be the case, read further:

"the Government of the Republic of Botswana (GRB) has pre-emption rights in respect of the CHL Group's interest in De Beers, enabling it to participate in the transaction and to increase its interest in De Beers, on a pro rata basis, to up to 25%. In the event that the GRB exercises its pre-emption rights in full, Anglo American, under the proposed transaction, would acquire an incremental 30% interest in De Beers, taking its total interest to 75%, and the consideration payable by Anglo American to the CHL Group would be reduced proportionately."

I would think that the Botswana government will participate, it should be in their interests. And take note, will pay fair value for the stake. I know that is a cheeky thing to say, but I thought that it is worth pointing out!!