Cartier-owner Richemont in talks to join De Beers bid, source says

By Clara Denina and Olivia Kumwenda-Mtambo

LONDON/JOHANNESBURG, Oct 15 (Reuters) - Richemont, the owner of Cartier, is in talks to join a consortium bidding for diamond miner De Beers, which is being sold by 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 key element of its supply chain as the diamond industry emerges from a prolonged downturn.

Cartier, which sells diamond necklaces for hundreds of thousands of dollars, has been doing well recently from wealthy shoppers looking for the most prized stones.

Richemont, which is cash-rich and also owns jeweller Van Cleef & Arpels, is discussing joining the Global Diamond Consortium, a group led by former De Beers CEO Gareth Penny, 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. 

"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.

Any bid for De Beers, which has been hit by the rise of much cheaper lab-grown diamonds, would also depend on Botswana's government, which 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'

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" given De Beers lost $511 million last year, RBC analysts said. 

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 a "K-shaped" recovery with higher-quality diamonds increasingly sought ​after, while the price of lower quality gems remains depressed. 

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. 

Filings show it had around €9 billion ($10.09 billion) in net cash at the end of June.

Bloomberg reported that negotiations were advanced, although there was no guarantee Richemont would join the consortium.

Antwerp, Belgium-based diamond-manufacturing company Pluczenik is also bidding for a stake, the company told Reuters without disclosing the size of the stake.

US jewellery retailer Signet could also join the bid, Bloomberg reported. Signet did not immediately reply to a request for comment. 

($1 = 0.8924 euros) 

(Reporting by Clara Denina in London, Olivia Kumwenda in Johannesburg, Alessandro Parodi in Paris. Writing by Tassilo Humme and Lisa Jucca. Editing by Emelia Sithole-Matarise, Mark Potter and Susan Fenton)