Last March, Kinross (KGC) bought just over 15 million shares of Harry Winston (HWD) at $3 (U.S.) each. The 19.9% stake in the company cost $45.6 million (U.S.) in total.
This morning, Kinross announced it was selling that position in a block trade. The price is still undetermined but Harry Winston’s shares are now trading around $12.60 (U.S.), off about 10% today, and the deal will likely come at a discount to that. Hypothetically, if the shares get sold for $12 (U.S.) each, Kinross will make just over $135 million (U.S.) Not too shabby for a year’s return.
The block is part of a bigger deal to sell off Kinross’ interest in the Diavik mine, Canada’s largest diamond producer. Yet, it was Harry Winston that initially sold the position to Kinross for around $105 million (U.S.) back in March, 2009, when the diamond miner was hurting for cash.
Kinross comes out of the transaction looking quite smart. Last March, chief executive officer Tye Burt insisted he wasn’t letting a gold miner get distracted by diamonds. “We believe it's a value-creating deal in the long term,” he said. A year out may not be long-term, but value was definitely there.