Rio Tinto said on March 26 it was considering selling its diamond assets because the mines no longer fit its strategy.
Author: Liezel Hill
Posted: Tuesday , 15 Jan 2013
Harry Winston’s sale of its watch and jewelry unit, announced today, gives the company “headroom in our credit facility to do another transaction,” Harry Winston Chief Executive Officer Robert A. Gannicott said today in a telephone interview. The Toronto-based company “will be looking for other things to do,” he said.
“We are aware that Rio Tinto wants to sell its 60 percent interest in the Diavik mine where we already own the 40 percent, that’s an obvious one for us to look at as long as the price is right,” Gannicott said. He declined to comment on how much Harry Winston would be willing to pay or whether the two companies had discussed a deal.
Rio Tinto said March 26 it was considering selling its diamond assets, which include its Diavik stake, the Argyle mine in Australia and 78 percent of Murowa in Zimbabwe, because the mines no longer fit its strategy. Harry Winston, which has a right of first refusal on Rio’s interest in Diavik, also agreed in November to buy BHP Billiton Ltd.’s Ekati mine in Canada and its marketing operations for the stones for $500 million.
The company said today it will sell its luxury retail unit to Swatch for $750 million and as much as $250 million in assumed debt. Harry Winston, which renamed itself from Aber Diamond Corp. in 2007 after acquiring the luxury jewelry brand, said it will now be known as Dominion Diamond Corp.
Harry Winston rose 4.4 percent to C$14.90 at the close in Toronto. The shares have increased 38 percent in the past 12 months.
“The acquisition of Rio’s diamond division could represent a fascinating opportunity for Harry Winston at the right price,” said Edward Sterck, an analyst at BMO Capital Markets in London. Still, “taking on a number of mining projects for a company which has not historically operated mines could increase the risk profile of the stock pending personnel announcements,” he said in a note today.
A London-based spokesman for Rio Tinto declined to comment on Gannicott’s statements.
–With assistance from Jesse Riseborough in London. Editors: Jessica Resnick-Ault, Steven Frank
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