Washington Companies to Acquire Dominion Diamond for $1.2B, or $14.25 per share, a 44% Premium

Mining and Exploration
17/07/2017 15:14

After months of speculation and a rejected takeover attempt, Canadian miner Dominion Diamond Corporation has entered into an arrangement agreement with The Washington Companies to acquire all of Dominion’s outstanding common shares for US$14.25 per share in cash, or a total equity value of approximately US$1.2 billion. The transaction represents a 44 percent premium to Dominion’s unaffected share price of US$9.92 on March 17, 2017. Dominion rejected Washington's initial advance of $1.1 billion, or $13.50 a share last March, calling it "opportunistic" and saying it undervalued the company. The Board of Directors of Dominion has unanimously determined that the arrangement is in the best interests of the company and recommends Dominion’s shareholders vote in favor of its passage. Dominion Diamond Corp. is the world's third-largest diamond producer by market value with a controlling interest in the Ekati Mine and is 40% owner of the Diavik Mine in Canada’s Northwest Territories. The Washington Companies is a group of privately held North American mining, industrial and transportation businesses founded by industrialist and entrepreneur Dennis R. Washington.

“The Washington offer delivers compelling and immediate value to Dominion shareholders at an attractive premium that recognizes the intrinsic value of Dominion and provides shareholders certainty through an all-cash offer,” said Jim Gowans, Chair of the Board of Dominion Diamond. “This offer is the result of a robust strategic review process and the Board unanimously agrees that this offer represents the best option available to Dominion shareholders, and recommends that shareholders vote in favour of this transaction.” He added, “Dominion also believes this transaction is an excellent outcome for the company’s stakeholders, including employees, community members and the Northwest Territories. The transaction allows the operation to take the next steps in mine development and ensures mining and its associated benefits continue in the North for decades to come.” 

Lawrence R. Simkins, President of Washington. “We are excited to work with their team to extend the mine life of the Ekati mine and continue partnering with Rio Tinto in the operation of the Diavik mine, while maintaining long-term employment for Dominion employees. The Washington Companies has a long track record of building businesses throughout North America, significant experience in mining as well as operating its investments in Canada, and a decades-long investment horizon. We share a commitment to providing long-term benefits to all Dominion stakeholders and to the Northwest Territories and its local communities.” Dominion confirms in the release that Washington will be a responsible, long-term operator and builder of Dominion’s world-class assets, and plans to extend the mine life of Ekati for decades, consistent with the current development plan. 

Dominion's statement confirms that as part of this acquisition, Washington plans to operate Dominion as a standalone business, appoint a new CEO based in Canada, keep Dominion’s headquarters in Canada and maintain a significantly Canadian management team and deploy capital to develop both the Jay and Fox Deep projects. The full details are available by following the link.