This may, may not have something to do with it:
08/14 5:19A De Beers Outlines Plans For Takeover Target Ashton
By Veronica Brooks MELBOURNE (Dow Jones)--South Africa's De Beers Consolidated Mines Ltd.
(DBRSY) Monday outlined plans for takeover target Ashton Mining Ltd. (A.ASH),
confirming its intention to grab the Australian diamond company's product to
feed its own marketing arm.
De Beers Managing Director Gary Ralfe also said the company is confident of
securing the remaining 30% of Malaysia Mining Corp.'s (P.MNN) 49.9% stake in
Ashton at the A$1.62 a share offer price.
De Beers, through its offshore unit De Beers Centenary AG (Z.DBR), launched
its A$522.1 million cash bid July 31 in an attempt to snare Ashton's 40.1%
stake in Argyle, the world's largest diamond mine situated in Western
Australia state.
Malaysia Mining has provided De Beers with the cornerstone of its bid by
agreeing to initially sell 19.9% of its 49.9% investment in Ashton at A$1.62.
However Ashton shares continue to trade above this price, closing Monday at
A$1.68, down 6 cents for the session as investors still hold out hope a rival
bid might emerge.
Ashton has rejected the offer as opportunistic and inadequate.
In its bidders' statement, De Beers said it will seek to terminate Ashton's
independent marketing joint venture with Argyle senior partner Rio Tinto Ltd.
(RTP) within 12 months of a successful takeover.
Argyle, which predominately produces lower quality diamonds used in
mass-market jewelry, severed ties with De Beers' powerful marketing arm, the
Diamond Trading Company, in June 1996.
"It is a condition of the offer that we should be able to access Ashton's
40% share of the production by no later than January 1, 2002," Ralfe told
analysts and reporters in a telephone conference.
"We know the product intimately and of course we do have a number of clients
who have a long history of manufacturing Argyle diamonds," he added. "So we
are confident that we're going to be able to place these diamonds with serious
users of them in such a way that certainly would not disturb the market for
Argyle diamonds."
Ralfe said the marketing price of Argyle diamonds, currently at between
US$11 and US$12 per carat, should be sustained in real terms under De Beers.
Ralfe reiterated the Ashton bid is "full and fair" and reflects the value of
a proposed underground extension of the Argyle mine. Such an extension could
extend the mine's life from 2007 to 2018.
"It's reasonable for us to expect that in due course Malaysia will accept
the offer for their remaining 30% interest in Ashton for the same price that
they accepted the first 19.9%," Ralfe said.
De Beers' takeover offer is conditional on it securing at least 50.1%
control of Ashton. It is also subject to approval by Australia's Foreign
Investment Review Board.
Important Synergies From Ashton
If successful, De Beers will draw "important synergies" in terms of
marketing and head office expenses, Ralfe added. De Beers also plans to merge
its prospecting operations in Australia and Canada with those of Ashton.
"De Beers' offer for Ashton is a serious and strategic one for our company.
The Argyle mine will broaden our geographic production base, while
complementing our production profile," said Ralfe.
He declined to comment on the likelihood of a counterbid from Rio Tinto.
Other contenders for Ashton bandied around the market include Melbourne-based
Broken Hill Proprietary Co.(BHP), Canada's Dia Met Minerals Ltd. and Alrosa of
Russia.
De Beers also said Monday it will not make any decision about the future of
Ashton's 34.8% stake in Australian gold producer Aurora Gold Ltd. until a
review of all Ashton's assets are completed.
Ralfe said De Beers has no plans to list in Australia, describing such a
move as premature.
"We're not saying no, never. We're simply saying we haven't got that far,"
said Ralfe. "Until we have assets (in Australia) it seems to be hypothetical
and indeed premature to be contemplating an Australian listing."
De Beers will dispatch its bid to Ashton shareholders in the week starting
August 28, with the offer open for at least one month.
De Beers is also involved in an unsolicited C$259 million takeover play for
Canada's Winspear Diamonds Inc.
Asked if De Beers is eyeing any other acquisition targets, Ralfe said: "If
there is, it hasn't yet been brought to my attention."
By Veronica Brooks, Dow Jones Newswiresveronica.brooks@dowjones.com
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