(Reuters) - Dominion Diamond Corp (DDC.TO) (DDC.N), the target of an unsolicited $1.1 billion approach by U.S. billionaire Dennis Washington, said on Monday that it will launch a formal sales process for the company, boosting the company’s share price.
The stock rose 3.4 percent on market speculation that global miners including Rio Tinto (RIO.L) (RIO.AX) and Anglo American’s (AAL.L) De Beers unit may now enter the fray and make a bid for Dominion, the world’s third-largest diamond producer by value.
Neither Rio, which is a partner of Dominion’s in the Diavik mine in northern Canada with a 60 percent stake, nor Anglo, immediately responded to a request for comment.
A source close to Rio said last week that the diversified miner was not interested in selling its stake in Diavik, if Washington was interested in acquiring it.
Dominion said earlier that it had formed a special committee to explore, review and evaluate a range of alternatives, including the sale of the company.
Four company directors - Trudy Curran, David Smith, Josef Vejvoda and Chairman Jim Gowans - would sit on the committee.
Dominion said on March 19 that it had considered and rebuffed a $13.50 a share takeover proposal from The Washington Companies as the terms to advance talks were unacceptable and the “opportunistic” bid undervalued the company.
Montana-based Washington is a group of privately held North American mining, industrial and transportation businesses founded by Dennis Washington.
M&G Investments, Dominion’s biggest shareholder with a stake of about 11 percent, told Reuters last week that in the wake of the Washington approach Dominion should run a formal sales process, opening its books to other potential suitors.
Small Canadian producer Stornoway Diamond Corp (SWY.TO) has also held merger talks with Dominion in recent months, and one source told Reuters last week that those talks were ongoing.
Analysts have also speculated that Russian diamond producer Alrosa and private equity players could be interested in Dominion, which owns the Ekati diamond mine in Canada’s Northwest Territories.
Dominion’s stock was last up 3.4 percent at $13.15 on the New York Stock Exchange.
Reporting by John Benny in Bengaluru. Additional reporting by Nicole Mordant in Vancouver.; Editing by Sriraj Kalluvila and Bernard Orr