Dominion Diamond endorses WashCorps’ $1.2B takeover bid
Montana-based company says it will keep miner stand-alone, headquarters to be in Canada
Dominion Diamond Corp., one of the world’s largest diamond producers, is endorsing a $1.2-billion (U.S.) friendly cash takeover bid from the Washington Companies, the Calgary-based miner said Monday.
Under the tentative agreement, the privately held Montana-based company is offering $14.25 per share for all shares of Dominion Diamond and it will have the opportunity to match any rival bid that comes forward.
“This offer is the result of a robust strategic review process and the board unanimously agrees that this offer represents the best option available to Dominion shareholders, and recommends that shareholders vote in favour of this transaction,” Jim Gowans, who chairs Dominion Diamond’s board of directors, said in a statement.
“Dominion also believes this transaction is an excellent outcome for the company’s stakeholders, including employees, community members and the Northwest Territories. 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.”
If successful, the deal would mark the culmination of a long process by Dominion to sell itself.
In March, Washington went public with a $1.1 billion, or $13.50 a share, unsolicited bid for Dominion. A week later, Dominion said it would start a process to find alternative buyers, the second time in two years it had put itself on the block. In 2015, Dominion had hired Rothschild & Co. to explore a sale amid a shareholder revolt.
Washington, sometimes called WashCorps, said it plans to operate Dominion Diamond as a stand-alone business with a new CEO based in Canada. It said it will also keep Dominion Diamond’s headquarters in Canada, with a Canadian management team, and honour its existing commitments to Indigenous communities to ensure their interests are protected.
The deal, which requires shareholder and other approvals, grants Dominion Diamond the right to consider unsolicited offers and WashCorps the right to match any superior bid within five business days.
Dominion said it will suspend paying dividends and its stock buybacks program pending completion of the deal, which is expected to close in the fourth quarter.
In recent months, Stornoway Diamond Corp. had been widely seen as a logical bidder because prior to the move by Washington, it had discussions with Dominion about a potential merger, people familiar with the matter had said. Rio Tinto Group was seen as an even more obvious candidate, given that it operates and has controlling interest in the nearby Diavik diamond mine, in which Dominion holds a 40-per-cent stake. With files by Bloomberg