Question:

What is behind the recent decision of the Oppenheimer family to merge De Beers, with its control of most of the world's gem diamonds, into the Anglo-American Corporation?

Answer:

Money. The Oppenheimer family, through it holding company, Central Holdings Limited, is buying De Beers, with two partners, the Anglo American Corporation (which has a cross-ownership) and a joint venture of De Beers and the Botswana government, called Debotswana, whose cash flow from the enormously profitable diamond mines in Botswana is necessary to finance the deal. The price that they are paying is conservatively estimated to be less than the free cash that De Beers will generate from the diamonds in its (and Debotswana's) mines in the next nine years. So, in effect, De Beers will pay for its own purchase in nine years. The Oppenheimers will own 45 percent, Anglo American 45 percent and Debotswana, ten percent. They will get not only diamond mines, but a multi-billion dollar stockpile of gem diamonds, a huge industrial diamond company and a global marketing cartel. Since its partners have agreed in advance that their Central Holding Company will run De Beers, the Oppenheimers can do what they without having to disclose their plans to other share-holders, journalists, public interest groups or the stock market authorities (since they will delist the company.) They can, at great profit to themselves, thus return to the secrecy that served them so well in the past. For more on the Diamond Invention click here.