| Fri 4 Nov 2011, 9:00 | | AGL - Anglo American plc - Anglo American agrees acquisition of |
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AGL
ANAAL
AGL - Anglo American plc - Anglo American agrees acquisition of
Oppenheimer family`s 40% interest in De Beers for US$5.1 billion
Anglo American plc ("the Company")
Incorporated in the United Kingdom
(Registration number: 3564138)
Short name: Anglo
Share code: AGL
ISIN number: GB00B1XZS820
Anglo American agrees acquisition of Oppenheimer family`s 40% interest in
De Beers for US$5.1 billion
Anglo American plc ("Anglo American") and CHL Holdings Limited ("CHL")
announce their agreement for Anglo American to acquire an incremental
interest in De Beers, increasing Anglo American`s current 45%
shareholding in the world`s leading diamond company to up to 85%.
Anglo American has entered into an agreement with CHL and Centhold
International Limited ("CIL"), together representing the Oppenheimer
family interests ("CHL Group"), to acquire their 40% interest in DB
Investments and De Beers sa ("De Beers") for a total cash consideration
of US$5.1 billion, subject to adjustment as provided for in the
agreement. Under the terms of the existing shareholders` agreement
between Anglo American, CHL and the Government of the Republic of
Botswana (GRB), the GRB has pre-emption rights in respect of the CHL
Group`s interest in De Beers, enabling it to participate in the
transaction and to increase its interest in De Beers, on a pro rata
basis, to up to 25%. In the event that the GRB exercises its pre-emption
rights in full, Anglo American, under the proposed transaction, would
acquire an incremental 30% interest in De Beers, taking its total
interest to 75%, and the consideration payable by Anglo American to the
CHL Group would be reduced proportionately.
Anglo American has a deep knowledge and understanding of De Beers and an
appreciation for the unique nature of diamonds, having been the company`s
largest shareholder since De Beers became a private company in 2001 and
as a longstanding shareholder in De Beers prior to that. De Beers`
geographically diverse portfolio comprises large scale, low cost mining
assets with proven distribution, sales and marketing capabilities and
further potential from its leading pipeline of greenfield and brownfield
projects and an expanding consumer-facing footprint. Anglo American is
well positioned to enhance the value of De Beers through its expertise
and scale in such areas as technical, supply chain and financial
management functions as part of a simplified and more integrated
ownership structure.
Cynthia Carroll, Chief Executive of Anglo American, said: "This
transaction is a unique opportunity for Anglo American to consolidate
control of the world`s leading diamond company - De Beers. Today`s
announcement marks our commitment to an industry with highly attractive
long term supply and demand fundamentals. Underpinned by the security of
supply offered by a new 10-year sales agreement with our partner, the
Government of the Republic of Botswana, this forms a compelling
proposition. De Beers` management team has led the business successfully
through the financial crisis and into a stable position and it is now
well placed for the future, with improving performance throughout 2011. I
believe that the benefits brought by Anglo American`s scale, technical,
operational and exploration expertise and financial resources, combined
with the unquestionable leadership of De Beers` business and iconic brand
will enable De Beers to enhance its position across the diamond pipeline
and capture the potential presented by a rapidly evolving diamond
market."
Nicky Oppenheimer, representing the Oppenheimer family interests, said:
"This has been a momentous and difficult decision as my family has been
in the diamond industry for more than 100 years and part of De Beers for
over 80 years. After careful and deliberate consideration of the offer,
and what is in the best interests of the family, we unanimously agreed to
accept Anglo American`s offer. Anglo American is the natural home for our
stake as they have been major shareholders in De Beers since 1926 and
have a deep knowledge of the diamond business. I am certain that Anglo
American will provide strong support to Philippe Mellier and the De Beers
management team."
Sir John Parker, Chairman of Anglo American, added: "The purchase of an
incremental interest in De Beers is fully aligned with the Board`s
strategic priorities. The value created in De Beers and the diamond
industry by the Oppenheimer family over the past century has been a
remarkable achievement. We look forward to increasing our involvement in
the business and building strong links and relationships with De Beers`
Sightholders and partners."
Safety and sustainable development are key value drivers for Anglo
American, with its pioneering health and enterprise development
programmes in South Africa, for example, widely recognised by industry
and government. Anglo American looks forward to working more closely with
governments through De Beers` joint venture partnerships in Botswana and
Namibia and with De Beers` BEE partners in South Africa to share
expertise and tailor programmes to employees and the wider communities as
may be appropriate.
The transaction is expected to be accretive to underlying earnings before
depreciation and amortisation on fair value adjustments in the year of
acquisition. The transaction does not alter the existing arrangements for
the management of De Beers, including Mr N F Oppenheimer`s position as
chairman, prior to completion. Mr P Mellier will continue as CEO of De
Beers.
In view of the fact that CHL and CIL are ultimately controlled through
intermediary companies by trusts of which Mr N F Oppenheimer is a
potential discretionary beneficiary and Mr N F Oppenheimer has been a
director of Anglo American within the last 12 months, the proposed
acquisition is categorised as a related party transaction under the terms
of the Listing Rules and therefore requires Anglo American shareholder
approval. A circular to Anglo American shareholders convening a General
Meeting of Anglo American shareholders for the purposes of seeking such
approval, in accordance with the requirements of the Listing Rules, will
be sent to shareholders in due course. The transaction is also subject to
regulatory and government approvals and required third party consents (if
any) and is expected to close in the second half of 2012.
Additional information:
This announcement is available on the Anglo American website
www.angloamerican.com, together with Anglo American`s slide presentation
to investors, a fact sheet on De Beers, in addition to the pre-existing
information available on De Beers.
Anglo American is one of the world`s largest mining companies, is
headquartered in the UK and listed on the London and Johannesburg stock
exchanges. Anglo American`s portfolio of mining businesses spans bulk
commodities - iron ore and manganese, metallurgical coal and thermal
coal; base metals - copper and nickel; and precious metals and minerals -
in which it is a global leader in both platinum and diamonds. Anglo
American is committed to the highest standards of safety and
responsibility across all its businesses and geographies and to making a
sustainable difference in the development of the communities around its
operations. The company`s mining operations and extensive pipeline of
growth projects are located in southern Africa, South America, Australia,
North America and Asia. www.angloamerican.com
De Beers, established in 1888, is the world`s leading diamond company
with unrivalled expertise in the exploration, mining and marketing of
diamonds. Together with its joint venture partners, De Beers operates in
more than 20 countries employing more than 16,000 people, and is the
world`s leading diamond producer with mining operations across Botswana,
Namibia, South Africa and Canada. As at 30 June 2011, De Beers had gross
assets of US$8.2 billion and reported EBITDA of US$1.2 billion for the
six months to 30 June 2011. As part of De Beers` operating philosophy,
the people of De Beers are committed to Living up to Diamonds by making a
lasting contribution to the communities in which they live and work. In
the countries in which De Beers has mining operations, this means
carrying out profitable business, whilst at the same time helping
Governments achieve their aspirations of turning natural resources into
shared national wealth. De Beers encourages sustainable working to ensure
long-term positive development for Africa, and returns more than US$3.0
billion to the continent every year. www.debeersgroup.com
The CHL group holds a 40% interest in De Beers (including certain
shareholder loans which at 31 October 2011 amounted to US$265 million).
Central Management Services Limited ("CMSL"), a fellow subsidiary of CHL,
was appointed under a management contract dated January 2002 ("the
Management Contract") to assist in the appointment of directors, senior
executives and management. Under the Management Contract, CMSL also
contributes to the strategic development of De Beers and to general
marketing initiatives and relationships with key customers and suppliers.
The Management Contract will terminate automatically on completion of the
transaction. The CHL group is ultimately controlled, through intermediary
companies, by trusts (the "Oppenheimer Trusts") of which Mr N F
Oppenheimer is a potential discretionary beneficiary. The Oppenheimer
Trusts also have an indirect interest, through E Oppenheimer & Son
International Limited ("EOSIL"), in 25.2 million ordinary shares of Anglo
American. In accordance with the Listing Rules, EOSIL has undertaken to
procure that such shares are not voted on the resolution to be proposed
at the General Meeting of Anglo American to be convened for the purposes
of approving the transaction.
The proposed acquisition is to be implemented, subject to obtaining the
required approval of Anglo American shareholders, and subject to Anglo
American being reasonably satisfied with the results of a limited
confirmatory due diligence exercise to be undertaken prior to the General
Meeting of Anglo American shareholders in respect of De Beers` material
mining licences, and, in addition, subject to obtaining necessary
regulatory and government approvals and required third party consents, by
the CHL Group offering all of the shares and existing shareholder loans
of the CHL Group to Anglo American and the GRB, pro rata to their
existing shareholdings in De Beers, for an aggregate consideration of
US$5.1 billion, subject to adjustment. Anglo American has agreed, subject
to such shareholder approval and confirmatory due diligence and subject
to obtaining necessary regulatory and government approvals and required
third party consents, to accept such offer when made in respect of all of
such interests. In the event that the GRB takes up such offer up to its
pro rata entitlement, Anglo American`s acceptance will be scaled back
accordingly and the interests in De Beers to be acquired by Anglo
American, and the cash consideration payable by Anglo American, will be
reduced accordingly, as described above.
The US$5.1 billion aggregate consideration payable for the CHL Group`s
interest in De Beers is subject to increase by an amount equivalent to
interest at a rate of 3.5% per annum from
4 November 2011 to closing of the transaction and decrease by reference
to any dividends or loan principal or interest received by the CHL Group
prior to closing. If closing of the transaction takes place more than
nine months from the date of this announcement (other than by reason of
CHL extending the time for satisfaction of the conditions), the
consideration will be increased by US$50 million. In addition, Anglo
American has agreed, in the event of a listing of De Beers in the two
year period following closing of the transaction, to pay capped
additional consideration to the CHL Group, equal to 20% (if a listing
were to occur in the first such year) or 10% (if a listing were to occur
in the second such year) of any increase in the attributable value
(determined by reference to the transaction consideration and the listing
price) of the De Beers equity acquired by Anglo American from the CHL
Group in the transaction.
Anglo American has agreed to pay to CHL (or as it may direct) a break fee
of US$75 million in the event that the transaction does not close.
For further information, please contact:
Anglo American
Media Investors
UK UK
James Wyatt-Tilby Leng Lau
Tel: +44 (0)20 7968 8759 Tel: +44 (0)20 7968
8540
Emily Blyth Caroline Crampton (nee
Tel: +44 (0)20 7968 8481 Metcalfe)
Tel: +44 (0)20 7968
2192
South Africa Leisha Wemyss
Pranill Ramchander Tel: +44 (0)20 7968
Tel: +27 (0)11 638 2592 8607
CHL Holdings Limited
James Teeger
Tel: +44 (0)1624 652 208
Nick Williams
Tel: +27 (0)11 447 3030
De Beers
David Prager
Tel: +44 (0)20 7430 3729
Lynette Gould
Tel: +44 (0)20 7430 3509
4 November 2011
Sponsor: UBS South Africa (Pty) Ltd
Date: 04/11/2011 09:00:11 Produced by the JSE SENS Department.
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