Diamond large De Beers in talks for $1B sale to consortium – fraction of earlier price as a consequence of plummeting demand: report

Diamonds could also be a lady’s best good friend, however the business just ain’t what it was once for De Beers.

The onetime diamond monopoly is reportedly a $1 billion offer from a consortium that desires to take it over – a big discount from De Beers’ earlier peak valuation of round $18 billion.

The British multinational is in sale talks with a group called Global Diamond Consortium, led by ex-De Beers CEO Gareth Penny, Bloomberg News reported Wednesday.

An ongoing diamond disaster has seen De Beers’ valuation plummet from a peak of $50 billion to round $2.3 billion as of February, according to the outlet.

The onetime diamond monopoly is reportedly a $1 billion offer from a consortium that desires to take it over. Robert – stock.adobe.com

Now Global Diamond Consortium desires to pay just $1 billion for the majority stake at present held by mining company Anglo American Plc, people acquainted with the proposal told Bloomberg. The consortium would pay $750 million upfront, with the relaxation of the dough transferred later. That falls means short of a $50 billion strategy from BHP group close to the start of 2024.

But current years have seen the diamond industry hammered by a selection of components, Bloomberg famous. After a sales growth during the COVID pandemic, luxurious spending in China – a key market for pure diamonds – plummeted. Meanwhile, artificial diamonds rose in reputation, with wedding site The Knot finding that almost half of engagement stones in 2023 have been lab-grown diamonds. Demand for the real article nose-dived worldwide.

Recent commerce tensions and geopolitical tumult have only worsened the scenario, Bloomberg reported. Both Anglo and Global Diamond Consortium declined to remark to the outlet.

“The valuation (which is not confirmed) reflects the state of the diamond industry and the belief that the current challenges are long-term and not cyclical,” Joshua Freedman, senior analyst for the Rapaport Group, which covers the diamond industry, told The Post.

Gareth Penny, who beforehand ran De Beers for 5 years, told the Economist turning the business round would require reviving demand. Youtube/Mining Indaba

“It’s worth noting that the bidders are seeking outside funding for the deal, so it is dependent on external parties seeing enough value in De Beers,” he added.

Victorian imperialist Cecil Rhodes based De Beers in 1888. Since not long after, the company has been nearly synonymous with the diamond business, for good and sick. The Oppenheimer household had a 40% stake in the company until 2011, when Anglo American bought it out.

Botswana – Africa’s greatest diamond producer – owns 15% of De Beers. The new proprietor must cut a deal with each the southern African nation and Anglo American. Since the diamond industry hit the doldrums, growth in Botswana has primarily ground to a halt, according to the Economist.

De Beers has long been synonymous with the diamond business, taking most of its gems from Botswana. REUTERS

A majority of De Beers’ diamonds come from there, though it also has mines in neighboring Namibia and South Africa, together with Canada.

Penny, who beforehand ran the company for 5 years, told the Economist turning the business round would require reviving demand.

“In over 30 years in this business I have never met a consumer that bought a diamond simply because it was shiny,” he was quoted as saying.

Global Diamond Consortium desires to pay just $1 billion for the majority De Beers stake at present held by mining company Anglo American Plc, people acquainted with the deal told Bloomberg REUTERS

Diamond analyst Paul Zimnisky said the diamond industry is in “a generational lull.”

“This has significantly impacted the valuation, especially as it pertains to the value of inventories and the resource in the ground,” he told The Post.

Additional reporting by Lisa Fickenscher

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