Dominion holds out for higher Washington offer
Canada’s Dominion Diamond is hoping Montana billionaire Dennis Washington will cough up a little more cash to buy the world’s third-largest producer of rough diamonds by value.
However, the company, which has put itself on the block twice in the past two years, says there is no guarantee a deal will take place.
“The company has not made any decisions related to strategic alternatives at this time and there can be no assurance that the exploration of strategic alternatives will result in any transaction or change in strategy,” Dominion said in a statement on Friday. “As previously disclosed, interested parties, including Washington [Companies], have executed confidentiality agreements with the company.”
The statement came after shares of Dominion were halted on Friday as rumours swirled about a possible takeover. A person with knowledge of the negotiations said Dominion was in exclusive talks with Washington Companies over a higher takeover offer than $13.50 a share. That was the bid underpinning the $1.1bn proposal Dominion received on February 21 from the billionaire’s mining-to-transportation conglomerate before it went out to seek alternative suitors.
The final price tag is still being discussed and a deal could be announced early next week, said the person, who asked not to be named because the matter was private. The revised bid could be $14-$15 a share, RBC analyst Richard Hatch said.
ICONIC CANADIAN
Dominion has stakes in two diamond mines, both in Canada’s Northwest Territories. Ekati, in which it holds a controlling interest, has been producing for almost two decades and is Canada’s first diamond mine.
Diavik, in which Dominion holds a 40% stake, is nearby and is operated by joint venture partner Rio Tinto Group.
If Washington’s bid is successful, the deal would bring together a colourful tycoon with an iconic Canadian company. The 82-year-old industrialist grew up in a government housing project in Washington state, contracting polio when he was eight, before his parents got divorced and he was passed around to live with relatives.
By the age of 14 he was financially self-sufficient, earning money boxing groceries and shining shoes. After graduating from high school, Washington became a heavy crane operator. By his early 30s, he had founded Washington Companies and began building an industrial empire that includes holdings in railways, one of North America’s largest open-pit copper mines in Butte, and container ship owner Seaspan.