Alrosa Board Approves Kristall Takeover

RAPAPORT… Alrosa is set to finalize its acquisition of diamond
manufacturer Kristall in a $29 million deal in October, following approval from
its supervisory board.

Alrosa expects the RUB 1.89 billion sale-and-purchase
agreement to be signed by the end of the month, with a concrete plan for the
manufacturer’s integration into the company to be in place by the end of the year, it noted.

Kristall is the leading polished-diamond manufacturer in
Russia and Europe, processing more than 200,000 carats of rough annually. While
Alrosa already runs a manufacturing unit, the acquisition of Kristall is set to
expand its share of the polished-production market from 20% to 70%.

“Despite the fact that Alrosa is currently a key supplier of
rough diamonds to Kristall, it accounts for as little as 0.5% of Alrosa’s sales
of rough diamonds,” Alexey Philippovskiy, Alrosa’s deputy CEO, said Wednesday.
“The deal value is less than 1% of Alrosa’s net assets and, according to our
estimates, the purchase price will not exceed Kristall’s net assets at the date
of the transaction.”

Last year Kristall produced 105,700 carats of polished
diamonds, with sales of 111,700 carats. It reported revenue of RUB 12.8 billion
($199.1 million) and profit of RUB 40.7 million ($633,040). The company also
operates a jewelry entity and a business that produces tooling and equipment
for the diamond industry.

Image: Polished diamonds. (Alrosa)