ALROSA has received approval from its Supervisory Board for the 100% acquisition in Joint-Stock Company “Production Corporation “Kristall”, at a meeting held on September 24, 2019.

The stock is to be acquired from the Russian Federation, which is represented by the Federal Agency for State Property Management (Rosimushchestvo) on the terms set forth in the decree of the Russian Government, the Company said. The move does not come as a surprise as ALROSA had earlier announced that the Supervisory Board would be considering the acquisition.

“According to the previously approved Russian Government decree, the value of the 100% equity interest in Kristall was determined on the basis of an independent appraiser's report at RUB 1,886 million,” ALROSA added.

The company’s Chief Executive Officer (CEO), Sergey Ivanov, has been assigned by ALROSA's Supervisory Board to enter into a sale and purchase agreement for Kristall's shares under the conditions proposed by Rosimushchestvo. 

The next step for the Company’s management will be to submit to the Supervisory Board, an action plan “to operate and develop Kristall as part of ALROSA Group” for its consideration, by the end of the year.

“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 total sales of rough diamonds,” said Alexey Philippovskiy, Deputy CEO of ALROSA. “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. The sale and purchase agreement is expected to be signed by the end of September, with the deal to be closed in the first half of October. After that, we will start developing a plan to integrate Kristall into ALROSA Group.”

ALROSA noted that in 2018, Kristall production and sales amounted to 105,700 and 111,700 carats of polished diamonds, respectively; and its total revenue amounted to RUB 12.8 billion, and net profit reached RUB 40.7 million.

Moreover, Kristall also has its own jewellery production facilities which it launched in 2002, under the name Smolensk Diamonds, which currently has over 50 sales points in 30 Russian cities. Another of Kristall’s subsidiaries, Almaz Servis, produces tooling and equipment for the diamond industry.