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Anglo American has signaled a highly unconventional sale process for its 85% stake in De Beers, placing the Government of Botswana at the center of negotiations with prospective buyers.
The move, confirmed by Anglo American CEO Duncan Wanblad at the FT Metals and Mining Summit, is aimed at securing an agreement that satisfies not only the eventual buyer but also Botswana, which owns 15% of De Beers through the Debswana joint venture.
“This isn’t going to be the classical first round, second round sale process,” Wanblad said, indicating that Anglo American will move into the second phase with only one or two short-listed bidders.
“What we are planning to do is now move into the second round with one or two of the potential selected buyers… and work with the Government of Botswana in finalising an agreement that works not only for the potential buyers, but also for Botswana,” Wanblad stated.
The CEO anticipates concluding an agreement within the next six months.
Political Pressure and Valuation
The decision to actively involve Botswana from the second round comes amid sharp criticism from President Duma Boko, who has publicly questioned Anglo American’s management of the diamond miner, especially after De Beers posted a $189 million loss for the first half of the year. Boko’s administration has made securing a greater stake and control of De Beers a national priority.
Wanblad acknowledged the political sensitivities, stating he was “very respectful” of Botswana’s ambitions and “very cognisant… about the role that De Beers plays in the diamond markets and specifically for Botswana.”
Bids and Market Outlook
Anglo American currently values De Beers at approximately $5 billion. However, the sale is taking place against a backdrop of a protracted slump in the rough diamond market.
Despite challenging market conditions, UBS recently estimated the sale could “positively surprise,” potentially fetching $3 billion to $4 billion, including deferred or contingent considerations. This contrasts with a sell-side consensus valuation of about $2.5 billion.
The sale is further complicated by a rival bid from Angola, operating through its state-owned diamond company, Endiama. Angola has proposed establishing a pan-African consortium of diamond-producing nations to jointly operate De Beers, a development Wanblad called “really positive news” that “underpinned the value of De Beers.”
Wanblad did not rule out the previously outlined option of a spin-out for De Beers if negotiations with selected buyers fail.
