By Clara Denina and Olivia Kumwenda-Mtambo
LONDON/JOHANNESBURG, Oct 15 (Reuters) - Luxury group Richemont, owner of Cartier, is in talks to join a consortium bidding for diamond miner De Beers, which was put up for sale by controlling shareholder Anglo American and is valued at about $1 billion, a person familiar with the matter said on Thursday.
A deal would give the Swiss luxury goods group greater influence over a core element of its supply chain as natural diamond player De Beers grapples with
the rapid ascent of cheaper lab-grown gems.
Richemont, which is cash-rich and also owns luxury jeweller Van Cleef & Arpels, is discussing joining the Global Diamond Consortium, a group led by former De Beers CEO Gareth Penny that is vying for Anglo American's 85% stake in the world's most famous diamond miner, the person told Reuters, confirming a Bloomberg News report.
Richemont, worth around $113 billion, did not respond to requests for comment. Anglo American declined to comment.
Filings show Richemont had around €9 billion ($10.09 billion) in net cash at the end of June, a treasure chest worth several times the entire value of De Beers.
"We view Richemont's potential participation as strategically meaningful but more about optics and long-term natural diamond category positioning than a financial event," RBC analysts said in a note.
Bloomberg reported that negotiations were advanced, although there was no guarantee Richemont would join the consortium.
CONSORTIUM INCLUDES SEVERAL PLAYERS
Other investors are lining up.
Antwerp, Belgium-based diamond-manufacturing company Pluczenik is also bidding for a stake, the company told Reuters, without disclosing the size of the stake.
And US jewellery retailer Signet is in talks to join the consortium, said a source familiar with the company. Signet declined to comment.
The company, which owns retail brands including KAY Jewelers, Zales and Jared, has worked with De Beers in recent years on natural diamond marketing campaigns. Shares of Signet were up 3.3% at $111.63 in US trading on Thursday.
Any bid for De Beers would also depend on Botswana's government, which owns 15% of the miner and has yet to say whether it intends to exercise a first right of refusal.
A spokesperson for Botswana's presidency said on Tuesday that the government would not comment until a transaction had been concluded and signed. Officials said this summer a deal was likely to be completed in the fourth quarter of 2026.
LONG SEARCH FOR A BUYER
Anglo put De Beers up for sale in 2024 as part of a wider restructuring amid falling diamond prices and growing demand for synthetic stones. De Beers has mining and exploration operations in Botswana, Namibia, Angola, South Africa and Canada.
Richemont Chairman and controlling shareholder Johann Rupert has affirmed his commitment to natural diamonds in high-end jewellery for his brands, as the industry works to maintain the gems' reputation as a true luxury worth the higher price.
Richemont would not be the first high-end jewellery company to directly invest in the mines that produce its diamonds. British diamond brand Graff, for example, holds a 14.9% stake in Gem Diamonds, owner of the Letseng mine in Lesotho.
'MONEY PIT'
Richemont shares have held up this year and outperformed the struggling luxury sector thanks to strong sales of jewellery, which consumers see as a store of value.
Dan Mano, CEO of natural diamond pricing and market advisor Rapaport, said the fact so many parties were involved shows individual groups are reluctant to take a large risk in De Beers.
And while Richemont is likely one of its biggest customers, there is a risk the investment becomes "a money pit," RBC analysts said.
De Beers has been loss-making since 2023. Last year, it reported an underlying EBIT loss of $787 million on revenue of nearly $3.5 billion.
Much depends on whether demand for mined diamonds recovers.
Tobias Kormind, managing director and co-founder of jewellery brand 77 Diamonds, said that if the market is at its lowest ebb, De Beers could offer a "completely historic" opportunity.
But "if this is not cyclical but structural, the demand does not improve, they waste a lot of money initially, and there's no impact," he added.
De Beers CEO Al Cook told Reuters in June that the miner has been steadily cutting its supply of stones to the market and that diamonds would become more rare. He sees higher-quality diamonds increasingly sought after, while the price of lower quality gems remains depressed.
($1 = 0.8924 euros)
(Reporting by Clara Denina in London, Olivia Kumwenda in Johannesburg, Alessandro Parodi in Paris, Helen Reid in London, Abigail Summerville and Anuja Bharat Mistry. Writing by Tassilo Hummel and Lisa Jucca. Editing by Emelia Sithole-Matarise, Mark Potter and Susan Fenton)
