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Rio Tinto beats De Beers to buy Ashton
Sharad Mistry
Mumbai, Nov 12: De beers, the global rough diamond major, is facing fresh challenges in acquiring the Australia-based Ashton Mining as Rio Tinto last week acquired a 49.82 per cent stake in the company after accepting Malaysia Mining Corporation (MMC) entire 49.72 per cent stake in Ashton. This, in addition to other aspects, seems its unlikely De Beers' almost certain acquisition of the Australian mining company, would come about. MMC is the largest equity holder of Ashton Mining, that controls Argyle Diamonds, one of the main competitors of De Beers for small, low end diamonds which De Beers doesn't have in its stockpile.Thus, the feared takeover of Ashton Mining and thus, Argyle Diamonds has disturbed the Indian diamond jewellery exporting trade, which to a large extent depends on its supplies from Argyle Diamonds. The fate of Ashton Mining, and therefore, Argyle Diamonds, will be decided today (November 13) as Ashton Mining's board of directors have adviced its shareholders to "await further advice from the board before taking any action" that would go in favour of De Beers. Rio Tinto has extended its offer to November 13, 2000. Till last week, it was almost certain that De Beers will finally be successful in taking over Ashton Mining, first by its arrangement with MMC and later on by increasing its stake higher than initially offered by Rio Tinto. Further, it also announced that it intends "as soon as practicable, to take necessary steps to increase its offer (to existing shareholders) to the following: $2.20 cash for each Ashton Shares1 Rio Tinto Ltd's share for every 14 Ashton shares, or one Rio Tinto plc share for every 14 Ashton shares; orAny combination of the aboveIt may be recalled that in July this year, De Beers had made an hostile, all cash takeover offer of around Australian $522.1 million to acquire Ashton Mining by entering into an arrangement wiht MMC, to buy the latter's 19.9 per cent stake in Ashton, which controls Argyle Diamonds, De Beers' main competitor for low-end diamonds. Till mid-1996 Argyle Diamonds sold its entire rough diamonds through De Beers' Central Selling Organisation (CSO). After the breakaway from CSO in mid-1996, Argyle has successfully marketed its diamonds the worldover, after getting its entire rough diamonds polished from India. Rio Tionto raised its takeover offer from A$1.85 to A$2.20 per share, with a 1 to 14 scrip alternative. De Beers bid of A$2.28 is still the higher bid, but lacks the regulatory approvals from the Australian foreign investment review board (FIRB), and the Belgian competition Council (BCC) that Rio Tinto has already won. It was on November 3, prior to Rio Tinto's announcement, De Beers had reported progress, after it received approval from the FIRB on four of the five conditions related to the takeover, though talks are still stalled on one issue. De Beers has already extended its offer to November 24 believing that both authorities would approve the application by November end. After being informed of Rio Tinto's acquisition, De Beers is understood to have stated that it "recognizes that receipt by Rio Tinto of valid acceptance for 49.82 per cent means that the De Beers offer is likely to be unsuccessful". Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
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