18 December 1998
Anglo to buy various
De Beers assets before
listing
David McKay
ANGLO American Corporation moved closer to
restructuring yesterday before listing in London, saying it
had reached agreement with De Beers to acquire various
listed and unlisted assets from the diamond group - with
one exception.
Contrary to a previous announcement, De Beers said it
was to retain its 4% stake in Anglogold, the world's
largest gold producer. "Although it was previously
announced that Anglo American Corporation would
acquire De Beers' interest in Anglogold, it has since been
decided by the parties that De Beers will retain its
interest," De Beers said.
The move surprised analysts who said that one reason
for retaining the stake was that the dividend yield from
Anglogold was likely to be better than that from the
corporation. "When you are expecting to be
cash-strapped and operating in a difficult market, as De
Beers is doing, then every penny will make a difference,"
one analyst said.
De Beers recently announced its lowest annual rough
diamond sales in more than a decade and there is
speculation that the group is to cut its year-end dividend,
the first time since 1992.
Another analyst said it could be a mistake for De Beers
to retain the stake in Anglogold. "De Beers has said that
it wants to become a dedicated diamond company and
now here it is with a small stake in a gold company."
Another theory is that De Beers believes Anglogold to
be undervalued and hopes to get a better price for the
stock at a later date. Anglogold recently bought the gold
mines of Minorco and is easily the largest gold producer
in the world with the largest gold resources. Analysts
have said that Anglogold, which listed on the New York
Stock Exchange this year, is due for a large positive
share rerating relative to its North American rivals.
The joint announcement yesterday forms part of the
restructuring of Anglo American and follows the
announcement that Anglo and Minorco have agreed in
principle to combine their businesses to establish Anglo
American plc, a UK company with global operations
which will have a primary listing in London.
Subject to shareholders' and SA Reserve Bank
approval, Anglo will from January 1 acquire a portfolio
from De Beers including interests in Anglo American
Platinum Corporation, Mondi, Namakwa Sands and
Samancor.
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