De Beers fails to retake diamonds' second tier.

In its battle with De Beers for the control over the minority shareholder in the Argyle Diamond Mine, Rio Tinto managed to snatch victory at the last possible moment. De Beers' gambit had seemed set to succeed, and so it would have reestablished its ascendancy over all of the diamond market.

De Beers' grand maneuver as corporate raider, which had commenced in June when the company made a bid for Canada's Winspear Diamonds Inc., and was followed up in July with an offer for Australia's Ashton Mining, looked for a while as if it is was going to pay off big. For, while second league mining operations were involved, the end-result of the process could be one of the most dramatic realignment of the diamond market in more than a decade.

But it was not to be. On November 6, when it appeared as if De Beers had both Winspear and Ashton in the can, Rio Tinto, Ashton's partner in the Argyle diamond mine, managed to acquire its Australian counterpart. It did so by equaling the second bid that had been made by De Beers.

Rio Tinto's victory came when it managed to get hold of 49.82 percent of the company, after obtaining the acceptance of Ashton's controlling shareholder, Malaysia Mining Corporation (MMC), which promised its entire 49.72 percent stake in the Melbourne-based mining company.

MMC's agreement came after Rio Tinto agreed to increase its earlier bid for Ashton, made on August 29, from Australian $1.85 a share, or A$596 million, to A$2.20 a share, or A$712 million.

The dual-listed Rio will also offer a script alternative of one of its locally listed shares (trading at A$27.19 each) or one of its shares listed in London, for every 14 Ashton shares, valuing Ashton at A$1.94 a share.

The reworked offer from Rio Tinto falls short of De Beers' A$745 million bid made on October 5. But with Rio Tinto already having 49.82 percent of the company in its control on an unconditional basis, the A$33 million is irrelevant.

In a terse statement released on November 7, a De Beers spokesperson said that the company noted Rio Tinto's announcement a day earlier. De Beers recognizes that receipt by Rio Tinto of valid acceptances for 49.82 percent means that the De Beers offer is unlikely to be successful, the spokesperson stated.

As it turned out, it seems as if De Beers lost the upper hand in the battle when, earlier, the Australia's Foreign Investment Review Board …