Dominion Diamond stock soars after word of takeover proposal from U.S. company
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TORONTO — Shares of Dominion Diamond Corp. (TSX:DDC) soared in early trading Monday following disclosure that it has received and rejected a non-binding takeover proposal worth about US$1.1 billion.
The offer was originally made to the Toronto-based company's board of directors on Feb. 21 by the Washington Companies but only revealed by both firms on Sunday after talks broke off last week.
The Montana-based company is offering US$13.50 per share in cash for Dominion Diamond stock, which is traded in Toronto and New York.
The offer from Washington Cos. was 36 per cent above the price for Dominion Diamond shares on Friday and 53 per cent above their closing price on Thursday, when the Canadian company issued revised guidance for the current year.
Shortly after trading began Monday, Dominion Diamond's stock opened at $16.37 in Toronto, up more than 20 per cent from Friday's close. Shares closed Monday at $16.27 in Toronto.
Dominion Diamond has mines in Northwest Territories. It operates the Ekati mine and owns a 40 per cent stake in the Diavik mine, which is operated by Rio Tinto.
On Sunday, Dominion Diamond said its board hadn't closed the door on the deal with Washington Cos. but wouldn't accept opening its books to a third party without certain protections. It also rejected conditions of the proposed negotiation.
"WashCorps continues to demand, as a condition to any discussions, a lengthy period of exclusivity, as well as the ability to veto the board's choice of new CEO," Dominion Diamond said.
"WashCorps has also refused to accept a customary form of standstill that would restrict it from using the confidential information to acquire control of the company."
Washington Cos. said in its statement Sunday that it had proposed a partial standstill agreement that would prevent it from acquiring shares, making an unsolicited offer and sponsoring a proxy fight against Dominion Diamond's board while exclusive negotiations were held.
"Dominion still refused. ... As a result, discussions have ended."
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