Following an acquisition attempt of Dominion Diamond Corp (NYSE:DDC), the company’s largest shareholder has urged the third-biggest producer of diamonds to allow access of its books to suitors. This was said by M&G Investments’ fund manager, James Horvat. The stake of M&G Investments in Dominion Diamond is approximately 11%.
“The best outcome for the owners right now is to do a proper strategic review, have people sign up who are interested. Maybe others will come out of the woodwork,” Horvat told Reuters in a phone interview from London.
Cash acquisition
This follows a bid by The Washington Companies to acquire Dominion for $1.1 billion in cash. The Washington Companies consists of a couple of transportation, industrial and mining companies operating in North America that were started by Dennis Washington.
In its response to the acquisition bid, Dominion Diamond admitted that its board of directors had looked into the proposal but had found the terms unacceptable. Though the share price of Dominion Diamond rose after the news broke, the share price was still below The Washington Companies’ share offer price.
After the talks had ended, the president of The Washington Companies left it up to the shareholders of Dominion to decide their next move. He, however, could not say whether The Washington Companies would be bypassing the board of directors and taking a formal bid to the shareholders directly. At present, The Washington Companies does not own any shares in Dominion Diamond.
Diamond mining consolidation
Besides The Washington Companies, other potential suitors for the diamond producer include mining giants such as De Beers and Rio Tinto plc (ADR) (NYSE:RIO). Dominion Diamond and Rio Tinto already jointly own a mine.
In recent months, Stornoway Diamond, a Canadian producer of diamonds, has also held merger talks with Dominion. This was according to sources who indicated that the talks had been highly private. Among the issues that were discussed in the merger talks included appointing Matt Manson, the current CEO and president of Stornoway, the chief executive officer of the entity that would result from the merger.
In Tuesday’s trading session, shares of Dominion Diamond Corp rose by 1.72% to close the day at $12.41.