While Anglo American is still looking for suitors for its De Beers diamond business so it can recoup capital on the depreciated asset, yet with no takers so far, rumours say it's talking to banks about floating it onto the market.
The world's diamond market has been in flux in recent years, largely due to artificial diamonds swamping industrial uses and waning luxury demand for the rock in the Chinese and Indian markets.
That perfect storm has rocked De Beers’ hegemony over the diamond trade and heavily devalued the business and its slice of the global market.
Up until the 1980s, the Botswana outfit controlled a market share of the precious jewel as high as 90% and by 2019, that had fallen to less than 30%.
Eight years earlier, Anglo American had upped its stake to 85% after buying out the Oppenheimer family in a deal worth US$5.1 billion.
Things have not worked out well for De Beers, with parent company Anglo having to writedown its capital worth by US$4.5 billion, leaving it with a valuation of just US$4.1 billion.
It's been looking for suitors to buy the business, yet so far, to no avail, leaving it with little option other than to float the historic diamond miner onto the market.
Anglo on De Beers
According to Bloomberg, an IPO of the diamond producer it would prefer to complete a trade sale, yet as the miner is in the middle of a huge restructuring it has resorted to contacting banks regarding an initial public offering (IPO) for the business.
The miner unveiled that restructuring in May last year selling off its metallurgical coal mines in Australia for around US$4 billion and is demerging its Anglo American Platinum and nickel businesses, as it pivots to focus on copper, high-grade iron ore and crop nutrients.
“Anglo is pursuing a dual-track process in its efforts to exit De Beers by trying to find a buyer for the struggling business while also starting preparations for an initial public offering as a backup solution,” Bloomberg wrote.
To boot, last year it successfully waved off a hostile takeover proposal from BHP (ASX: BHP) for US$75 billion - that would've made it the largest M&A transaction in history.
Anglo American chief exec Duncan Wanblad said in February that De Beers planned to exit the firm by the end of this year.
"It's going to be fully set up as a stand-alone business to make sure that it’s not going to be impacting as a drag in any way, shape or form on the business,” he noted.
