U.S. conglomerate to purchase Dominion Diamond in $1.2B US deal
The Washington Companies pledges to take an 'incredibly long-term view' with N.W.T. assets
U.S-based conglomerate The Washington Companies is buying Dominion Diamond Corporation, one of the world's largest diamond producers, for $1.2 billion US.
Under the terms of the deal, a subsidiary of The Washington Companies will purchase all of Calgary-based Dominion's outstanding common shares for $14.25 US ($18.03 CDN) a share, the companies announced in a news release Monday.
The Washington Companies is a privately-owned group of industrial companies, including a copper mine in Montana. In 2012, one of its companies won the contract to build non-combat vessels for the Canadian Coast Guard and Canadian Navy.
The deal will give The Washington Companies ownership of Dominion's holdings including two in the Northwest Territories. The group will take controlling interest in the Ekati mine and 40 per cent ownership of the Diavik mine.
'Incredibly long-term view'
"The Dominion opportunity made sense for us and is something that is interesting because it checks two boxes, one of which is mining … secondly it's in Canada," said Larry Simkins, the president and CEO of The Washington Companies, in a phone interview with CBC News.
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Simkins pledged to take an "incredibly long-term view" with the N.W.T. assets.
"As a long-term player, we're very interested in continuing to mine and exploring new pipes on that property for a long period of time," Simkins said.
Officials with The Washington Companies say they plan to appoint a new CEO based in Canada to the Dominion management team. Dominion's headquarters will stay in Canada and have a significantly Canadian management team.
The company says it will continue the recruitment, training and employment of Indigenous people and honour the existing commitments to the Indigenous communities.
"We're aware of the [impact benefit agreements], we're well aware and our intent is to maintain those," Simkins said, adding he would be in the North meeting with Indigenous leaders next week.
Washington Companies first bid in March
Dominion Diamond's board of directors recommends shareholders accept the deal, but has not always been receptive to the idea of selling the company.
In March, the board rejected a $1.1-billion US takeover bid by The Washington Companies as a "highly opportunistic" attempt by a U.S conglomerate to see its confidential information.
"There aren't many potential parties that could step in and operate a company like this," Zimnisky said. "Washington definitely has the cash and experience in mining, even if it's not diamond mining."
Dominion Diamond has been operating efficiently and it doesn't appear the Washington Companies would move to slash the workforce, he said.
"I don't know if there's a whole lot more they could do as far as cost-cutting," he said. "I don't think there's any reason to think they're going to cut the workforce at this time."
The deal still requires shareholder and other approvals. It's expected to close in the fourth quarter.
With files from Canadian Press