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Dominion Rejects $1.1B Takeover Bid

Mar 20, 2017 10:10 AM   By Rapaport News
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RAPAPORT... Dominion Diamond Corp has turned down an offer to be purchased for over $1 billion by the Washington Companies, the mining company said late Sunday.

Washington, which has interests in mining, transportation and heavy equipment businesses across the U.S. and Canada, offered Dominion $13.50 a share on February 21, representing a 35-percent premium to the closing price on Friday. Dominion shares rose 23 percent to $12.25 in Monday morning trading on the New York Stock Exchange.

Dominion called the offer “opportunistic,” saying the proposal failed to recognize the company’s full value under its current business plan.

“Based on the presentation received from WashCorps [the Washington Companies], and by their own admission, the board confirmed that WashCorps does not have experience in the highly specialized diamond mining and marketing industry,” Dominion said in its Sunday statement. “WashCorps also advised that they did not have any unique plans for the business.”

Washington, meanwhile, said Sunday that it was supportive of Dominion’s plans to develop its mining assets, adding that were it to acquire the company, it would put in place a long-term cost structure “to preserve the operational and financial flexibility for management to execute its strategic plan.”

“We are disappointed that Dominion’s board has thus far prevented Washington from moving ahead with its proposal, under which shareholders would receive a substantial premium and immediate liquidity, but we remain fully committed to completing this transaction,” said Lawrence Simkins, Washington Companies’ president.

Washington said Dominion’s board had so far refused to let it perform due diligence, which might lead to an increased offer.

Dominion countered that Washington’s demand for a lengthy period of exclusivity as well as a veto on the pending choice of a new CEO at Dominion would paralyze the company.

“The Dominion board is more than willing to consider all value-creating opportunities for the company, but it will not do so to the detriment of its shareholders and other stakeholders,” Dominion said. “The board of directors reiterates its openness to engage with WashCorps on customary terms.”

Dominion said last week it expects sales to increase to between $875 million and $975 million in the current fiscal year, which ends January 31, 2018.

Growth will be driven by increased production volume as the company develops new pits at its wholly owned Ekati mine, and a planned increase at Diavik, in which the company has a 40-percent stake (the rest is owned by Rio Tinto). Dominion’s total production this year is forecast at 9.1 million to 10 million carats, from 7.87 million carats last year, the company said.
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Tags: diamond, diamonds, Diavik, Dominion, ekati, Rapaport News, Rio Tinto, Washington Companies
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