After a period of intense speculation, Dominion Diamond Corporation and The Washington Companies  announced yesterday that that they have entered into an arrangement agreement for the latter to acquire the former.

The Washington Companies, “a group of privately held North American mining, industrial and transportation businesses founded by industrialist and entrepreneur Dennis R. Washington”, will take over  Dominion through an affiliated entity of the Washington  Companies acquiring “all of Dominion’s outstanding common shares for US$ 14.25 per share in cash or a total equity value of approximately US$ 1.2 billion pursuant to a plan of arrangement (the “Arrangement”) under the Canada Business Corporations Act”.

 “The transaction represents a 44 per cent premium to Dominion’s unaffected share price of US$ 9.92 on March 17, 2017,” the Company said. “The transaction marks the result of Dominion's review of strategic alternatives as previously announced on March 27, 2017.”

Dominion added: “The Board of Directors of Dominion, after consultation with financial and legal advisors, and based on the recommendation of a special committee of the Board consisting of four independent directors, has unanimously determined that the Arrangement is in the best interests of the Company, approved the Arrangement and recommends that Dominion’s shareholders vote in favour of the Arrangement. All directors of the Company have entered into support agreements to vote their common shares in support of the Arrangement.”

Lawrence R. Simkins, President of Washington commented: “Dominion Diamond has an excellent collection of mining assets and a talented and experienced management team and workforce.  We are excited to work with their team to extend the mine life of the Ekati mine and continue partnering with Rio Tinto in the operation of the Diavik mine, while maintaining long-term employment for Dominion employees. The Washington Companies has a long track record of building businesses throughout North America, significant experience in mining as well as operating its investments in Canada, and a decades-long investment horizon. We share a commitment to providing long-term benefits to all Dominion stakeholders and to the Northwest Territories and its local communities.”

“The Washington offer delivers compelling and immediate value to Dominion shareholders at an attractive premium that recognises the intrinsic value of Dominion and provides shareholders certainty through an all-cash offer,” said Jim Gowans, Chair of the Board of Dominion Diamond Corporation. “This offer is the result of a robust strategic review process and the Board unanimously agrees that this offer represents the best option available to Dominion shareholders, and recommends that shareholders vote in favour of this transaction.”

Dennis Washington, Founder of The Washington Companies said: “The Washington Companies’ commitments to safety, operational excellence, innovation and world-class management teams position us favourably for long-term success at the Ekati and Diavik mines for the benefit of all Dominion Diamond stakeholders. I look forward to the next chapter of continuing to build and support successful, safe business operations in the Northwest Territories.”

There are some changes in the offing which include Dominion being operated as a standalone business; appointment of a new CEO based in Canada; deployment of capital to develop both the Jay and Fox Deep projects; and new investments in a “reinvigorated” greenfield exploration programme.

Washington Companies has also expressed its commitment to maintaining  a high level of environmental stewardship through all phases of its operations; provide ongoing and long-term employment for skilled, high-paying jobs at Dominion; and to maintain a focus on the recruitment, training and employment of Indigenous people and to honour existing commitments to the Indigenous communities to ensure their interests are protected. Other welfare schemes will also be continued it is understood.

Finally, Washington Companies has also announced its intention to “continue to promote Dominion’s CanadaMark brand for its ethically sourced and premium Canadian diamonds”.