Dominion Diamond agrees to US$1.2 billion agreement
The Washington Companies has won over the board of Dominion Diamond Corp., one of the world’s largest diamond producers, with a sweetened US$1.2billion bid.
The privately held Montana firm is offering US$14.25 in cash per share for all stock in Dominion Diamond, up from its US$13.50 per share offer that Dominion rejected in March.
“We’re going to be in Canada for a very long time and this was a nice addition to our portfolio,” Lawrence Simkins, president of Washington Cos., said in a phone interview.
Dominion’s board unanimously supported the bid, with board chair Jim Gowans saying it’s the best option available to shareholders, employees and community members.
“The transaction allows the operation to take the next steps in mine development and ensures mining and its associated benefits continue in the North for decades to come,” Gowans said in a statement.
If the deal is approved, it will give Washington Cos. a controlling interest in the Ekati mine and a 40 per cent stake in the Diavik diamond mine run by Rio Tinto, both in the Northwest Territories.
Washington Cos. said it’s committed to moving ahead with plans to extend the life of the Ekati diamond mine, invest in exploration and honour existing commitments to Indigenous communities.
The company said it plans to operate Dominion Diamond as a standalone business with a new CEO based in Canada, but wouldn’t commit to keeping the head office in Calgary.
RBC Capital Markets analyst Richard Hatch said in a note that Washington Cos., which is paying a 44 per cent premium to where Dominion was trading before the March bid, is the logical bidder and expects the deal to go through.
The deal, which requires shareholder and other approvals, grants Dominion the right to consider unsolicited offers and Washington Cos. the right to match any superior bid within five business days.