Vancouver — The Belgian competition laws have prompted Australia’s BHP (BHP-N) to extend its purchase offer for Dia Met Minerals (DMM-T) to June 20 from May 18.
The extension is the result of the notification procedure, which allows the Belgian competition authorities up to 45 days to review the transaction.
The all-cash takeover bid requires approval from the authorities in Belgium because most of the world’s rough diamonds are traded there. As the major has already received an advanced ruling certificate from the Canadian competition bureau, no other regulatory approvals are required for the takeover.
BHP has tabled $21 in cash per share for all the outstanding shares of Dia Met, including the Class A subordinate and Class B multiple voting shares. The offer is worth $687 million and is based on 32.7 million Dia Met shares outstanding on a fully diluted basis.
Dia Met’s board of directors has unanimously concluded that the offer is in the best interests of its shareholders. Financial advisor Credit Suisse First Boston also regards the offer as fair. The takeover bid values the company at about 14 times its earnings.
Dia Met’s main asset is its 29% stake in the highly profitable Ekati mine, 300 km northeast of Yellowknife. Ekati, which entered production in October 1998, was Canada’s first diamond mine. BHP is the operator and 51%-owner. The remaining 20% is split between geologists Charles Fipke and Stewart Blusson.
Dia Met’s share of diamond sales for the fiscal year was $187 million, from which $93 million were deducted for cost of sales and $16.1 million for amortization and depreciation, yielding equity-in-earnings of $117 million.
The company’s net earnings for the year were $49.7 million, or $1.61 per share, compared with $50.3 million, or $1.65 per share, for 2000. Over the year, Dia Met repaid $81.3 million owed, reducing its debt obligations to $123.5 million.
The offer is subject to BHP’s acquisition of at least 75% of each class of shares on a fully diluted basis.
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