ncial News
Mon, 31 Jul 2000, 2:05pm EST
De Beers Offers A$522.1 Mln for Australia's Ashton
(Update4)
By Dudley White
Melbourne, July 31 (Bloomberg) -- De Beers, the world's No. 1 diamond
company, offered A$522.1 million ($306 million) for Ashton Mining Ltd., an
acquisition that would give it 40 percent of the Argyle mine, the world's top
producer of diamonds
De Beers offered A$1.62 a share for Ashton, 20 percent more than the closing
price on Friday. Melbourne-based Ashton called the offer ``inadequate'' and
advised shareholders to reject the bid. Ashton shares rose as much as 29
Australian cents, or 21.5 percent, to A$1.64.
This is the third takeover move in three months by De Beers, which controls
two-thirds of the world's diamond trade, as it attempts to increase its control of
diamond resources and expand outside South Africa, where mining costs are
among the highest in the world.
``De Beers are obviously trying to tie up all the diamond deposits around the
world,'' said David Whitten, who helps manage A$700 million in global resource
stocks at Colonial First State Investments in Sydney, and who holds De Beers'
shares. Argyle ``will be a small addition to their volume but it will give them an
extra niche in the low end of the market.''
De Beers, last month offered $175.26 million to buy Winspear Diamonds Inc. of
Canada, and in May offered to buy Industrial and Commercial Holdings Ltd. for
$77 million to win full control of South Africa's biggest gem mine.
The offer is the latest in a series of bids for Australian mining companies by their
South African rivals. AngloGold Ltd. last year acquired Acacia Resources Ltd. for
$529 million, while Anglo American Plc, which has half its assets in South
Africa, has offered to buy iron ore producer North Ltd.
The Australian dollar has fallen more than 10 percent this year against the U.S.
dollar, making Australian companies cheaper for rivals using other currencies.
Ashton Mining shares before last week had risen 36 percent this year.
Acquiring Ashton would give De Beers a larger share of the world market for the
cheaper, lower quality diamonds produced by the Argyle mine in Western
Australia state.
The offer is dependent on De Beers winning support of 50.1 percent of Ashton
shareholders and on approval from Australian regulators.
De Beers said Malaysian Mining Corp., which owns 49.9 percent of Ashton, has
agreed to sell it a block of 19.9 percent of the Australian company's stock. The
Malaysian company hasn't agreed to sell the remainder of its shares, said De
Beers Finance Director Paddy Kell.
Ashton said last week it expects record sales will likely raise first-half profit as
much as 20 percent above its results during the same period of 1999.
Rio Tinto, the world's second-biggest mining company, owns the remaining 60
percent of the Argyle open-pit mine, the world's biggest diamond mine by volume.
Ashton said last week it expects to extend the life of the mine to 2018 from 2007
by mining underground.
``The management of Argyle has been looking at going underground,'' Kell said in
an interview. ``In that arena, we have particular expertise.''
Kell said De Beers may consider selling shares in Australia if it completes the
takeover of Ashton. Anglo American has also said it may sell shares in Australia.
``It's not at the top of the list of priorities, but down the line it's something we'll
need to look at,'' Kell said.
De Beers was advised by N M Rothschild & Sons Ltd. and by Blake Dawson
Waldron.
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