[CTRL] De Beers Goes Private In $19 Billion Deal.

[William Shannon]

http://news.bbc.co.uk/hi/english/business/newsid_1337000/1337637.stm Friday, 18 May, 2001, 10:04 GMT 11:04 UK De Beers goes private in $19bn deal Shareholders in South African mining giant De Beers have overwhelmingly voted in favour of a $19bn (13bn) acquisition offer from a consortium led by its sister company, mining group Anglo American, and the wealthy Oppenheimer family. De Beers, which commands about two thirds of the global diamond market, will now be delisted from the Johannesburg stock exchange and taken private. The deal will bring a huge cash injection to the South African economy. However, in the long-term dividend payments to foreign shareholders could weaken the country's currency, the rand. The transaction will simplify the complicated web of cross-shareholdings between De Beers and Anglo American, and this is expected to boost Anglo American's share price. However, it will do nothing to change the balance of power in the market for diamonds. The new owners The Oppenheimers and Anglo American will jointly own 45% of the company. An additional 10% stake is being taken by another joint venture that will include the Botswana governmen through its Debswana diamond venture with De Beers. During the bidding process, the offer price had edged up about $2bn after some major De Beers shareholders rejected previous offers as too low. Now 94.1% of votes were in favour of the deal. But analysts said that rather than the higher offer price, what convinced many investors to cash in now was their growing concern about a global economic slowdown. "I think if the world markets were very different and we were having a very bullish market, I don't think the consortium would have found this easy to push through," said Standard Equities analyst Justin Pearson-Taylor. Cash injection The deal could bring up to $3.5bn into South Africa, and the prospect of such a cash injection has sent South Africa's stock market soaring in recent weeks. But economists have called for caution because the long-term effects of losing the country's number one listed company may be negative. In addition, the economists warned that the South African rand's strength could suffer from large dividend payments to Anglo American's foreign investors. Share prices De Beers' share price rocketed to an all-time high of 376 rand (£33) on Thursday ahead of the shareholders' vote, before slipping back to 371 rand. In early trading on Friday, the stock remained fairly stable, with Anglo American shares trading at around 139.20 rand. After the deal was approved, both stocks fell again as investors cashed in their profits.