Dominion Diamond Corp. headed for the biggest gain in eight years after billionaire Dennis Washington went public with a $1.1 billion offer for the Canadian company after weeks of private talks hit an impasse.
Closely held Washington Cos. made the proposal to acquire Toronto-based Dominion Diamond for $13.50 a share on Feb. 21. Dominion’s board has stalled on the offer, Washington Cos. said in a statement Sunday. The bid carried a 36 percent premium to Dominion’s closing price on Friday. The stock rose 24 percent to $12.29 at 9:48 a.m. in New York Monday.
Washington Cos., which has interests in mining, marine and rail transportation and heavy equipment distribution, said it has a long track record of making businesses grow throughout North America, with expertise in the mining industry and the Canadian market. The company said Dominion’s board has refused to let it perform due diligence, which might lead to an increased offer.
“We are disappointed that Dominion’s board has thus far prevented Washington from moving ahead with its proposal under which shareholders would receive a substantial premium and immediate liquidity, but we remain fully committed to completing this transaction,” said Lawrence Simkins, Washington Cos.’ president, in the statement.
The offer price comes at a decent premium to where Dominion has been trading given a sustained selloff in diamond stocks over concerns around Indian demonetization, said Edward Sterck, an analyst with BMO Capital Markets in London.
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