Monday, November 7, 2011

End of the Oppenheimer Era at DeBeers: Nicky Oppenheimer on What the Family Will Do With the $5.1 Billion

I almost put the old DBRSY symbol into the headline.
First up, from the New Zealand Herald:
De Beers sale signals end of an empire

After ruling the diamond industry for close to a century, South Africa's unofficial Royal family, the Oppenheimer's, have signalled the end of an era by selling out of De Beers.

The descendants of Ernest Oppenheimer, the swashbuckling diamond trader who wrested control of De Beers in 1927, sold their remaining 40 per cent stake in the world's biggest diamond producer to Anglo America for US$5.1 billion (NZ$6.4bn).

The deal will hand control of De Beers to Anglo American by hiking its stake in the private company to 85 per cent. It will mark a new era for the family, which has not only played a key role in De Beers for more than eight decades but also founded Anglo American.

It also represents the new stage for De Beers, a company inextricably linked with Britain's colonial past that this year recorded record interim sales, and for Anglo American, with diamond sales set to accelerate in the coming years.

Des Kilalea, an analyst at RBC Capital Markets in London, said: "It is the end of an era because the Oppenheimers are intrinsically associated with De Beers and Anglo American."

Ernest's 65-year grandson, Nicky, studied at Harrow and Oxford before spending 43 years at De Beers. He will step down as chairman after the deal goes through. Nicky's departure from De Beers comes eight months after he retired as a non-executive director of Anglo American after nearly four decades, leaving the mining company without a founding family member on its board for the first time....MORE
And from MineWeb:
De Beer's Selling out to Anglo - Nicky Oppenheimer
Nicky Oppenheimer speaks on what the family is planning to do with the $5.1bn it will receive from Anglo American for its stake in De Beers

Download this interview
ALEC HOGG: The big story of the day is the Oppenheimer family selling out of De Beers. Peter Major, the mining consultant at Cadiz Corporate Solutions joins us now. Peter, I must tell you I'm very partial to the Oppenheimers, certainly to the grand old lady of racing - she's our first lady in the racing industry, Bridget Oppenheimer. I would have thought in a case like this she and Harry had spent so much time together - this was their company - couldn't the kids have waited a little bit longer?

PETER MAJOR: Gee, I don't know, Alec. If you say that the diamond price hit an all-time high three months ago - and that means they were much higher, like 25%, 30% higher than at the peak in 2008, and I'm guessing this deal was probably consummated three, four months ago at its peak - I'd say perfect timing. You know, if you wait two more years it might look like the bottom or too late, when the company was going cap in hand trying to borrow 1.5bn, 2bn just to keep it liquid.

ALEC HOGG: So the timing was right. Nicky's done a good thing. What about his son, though, Jonathan? He had shown interest in getting involved at De Beers.

PETER MAJOR: He had, and he's been quite involved in the business at different levels. But I'm trying to think through in how many companies the fourth generation is really strong, committed, and desirous to keep it going. You can maybe say Ford Motor Company has three, four generations there, with Bill running it. But are Bill Gates' kids really going to want to take over Microsoft? Are Steven Jobs kids going to want to run Apple? So I think you get more removed as the generations go by, and the companies that always - do I say are always under threat? - yes, it's a monopoly. Times are changing, you've got big competitors, like Russia, Canada, Australia, Angola and Botswana wanting a bigger say in things. Nicky's mid-60s.

    So I don't know if it would be worth Jonathan's while to say: "Let's keep all the family fortune, De Beers, and darn it, I want to keep running it - or trying to run it."

ALEC HOGG: Well, the man you're talking about, Nicky Oppenheimer, in fact joins us now. Nicky, good to have you on the programme. We are very sad, some of us, to see that the family is leaving the De Beers myth. It couldn't have been an easy decision.

NICKY OPPENHEIMER: Alec, evening to you. No, obviously very emotional for all of us in the family when we debated whether this was the right thing to do or not. You know, it's a 100 years of history - 1902 when my grandfather came out here first to join the diamond business in Kimberley. So indeed very emotional. But at the end of the day we in the family decided this was indeed the right thing to do, and it was a unanimous decision. And in a sense you've got to move on and now's the time to look to the future and think what exciting things we can do in Africa in the future....MORE
Nothing is forever.
Except, maybe, Neil Diamond.