Harry Clawar''s latest on gold price suppression


By Edward West
South Africa Business Report
February 02 2001

Cape Town - De Beers' share price rocketed 17,37 percent, or R44,40,
to close at a new 12-month high of R300 yesterday on the surprise
news that Anglo American had made a takeover bid for the diamond

The proposed deal could unlock potential in De Beers and dismantle a
complicated series of cross-holdings with Anglo American, the mining
and resources group.

It could also lead to a proposal being put to the holders of De
Beers' linked units at $40 per linked unit, De Beers said in a
cautionary statement.

The offer represented a slight premium (about R8 a share) to
yesterday's share price, based on the currency at R7,72 a dollar.

The announcement of the proposed $11 billion deal propelled the all
share index on the JSE Securities Exchange to a record year high,
gaining 1,7 percent, or 155,7 points, to end at 9227,5. The index is
now less than 100 points away from an all-time high.

Anglo American said it had made a fair offer in its bid for De Beers.

The $11 billion deal would benefit shareholders of both groups, an
analyst said yesterday.

Anglo American shares were up 1,33 percent, or 640c, to R488,40.

The proposed deal between De Beers and the founding Oppenheimer
family, Anglo American and Debswana - De Beers' joint venture with
the Botswana government - led to about a million of De Beers' 400
million shares being traded on the JSE yesterday.

"We had been expecting this news over the past 12 to 18 months, but
we were still taken by surprise at how fast it has all happened,"
said one analyst. Tony Trahar, the chairman of Anglo American, "has
certainly surprised us over the 10 months he has been in office".

The consortium with which De Beers is in talks is 45 percent
represented by the Oppenheimer family holding company Central
Holdings Limited, 45 percent by Anglo American and the remaining 10
percent by Debswana.

Anglo American already holds a 32,3 percent stake in De Beers, while
De Beers holds 35,4 percent of Anglo.

The offer, likely to comprise a combination of Anglo shares and cash
for De Beers minorities equivalent to $40 a share, was expected to
result in the effective delisting of De Beers, the analysts said.

Central Holdings Limited would pitch for the remaining 68 percent of
De Beers, in the ratio of the shareholders' stakes in the Central
Holdings Limited, with Debswana likely to resell its shares back to
Anglo later.

"The elimination of this cross-holding will not only be to the
benefit of Anglo's rating, but also to De Beers' shareholders. Anglo
has always said it liked De Beers' mining operations; it fits in with
Anglo's focus on mining and resources," one of the analysts said.

Anglo had been divesting itself of its non-core assets - yesterday's
conclusion of the conditions precedent for a share swap with Remgro
for Anglo's 15,3 percent of FirstRand was a case in point - but the
deal would tidy Anglo's shareholding structure and improve its share
rating, analysts said.