The Washington Companies has entered into an agreement to take over Dominion Diamond for $1.2bn.

The transaction is a result of Dominion's review of strategic alternatives previously announced in March 2017.

After the completion of the transaction, Washington will become long-term operator and builder of Dominion’s assets.

In line with the current development plan, Washington plans to extend the mine life of Ekati for decades.

As part of the acquisition, Washington plans to run Dominion business on a standalone basis.

It will appoint a new CEO based in Canada to the Dominion management team, while keeping Dominion’s headquarters in Canada.

Washington will infuse capital to develop both the Jay and Fox Deep projects.

Washington president Lawrence R. Simkins said: “Dominion Diamond has an excellent collection of mining assets and a talented and experienced management team and workforce.

“We are excited to work with their team to extend the mine life of the Ekati mine and continue partnering with Rio Tinto in the operation of the Diavik mine, while maintaining long-term employment for Dominion employees.”

The transaction is expected to be completed in the fourth quarter of 2017.

Under an arrangement agreement, Dominion has right to consider and accept superior proposals for the sale of its assets.

If there is a superior proposal, Washington will have to respond to the superior proposal in five business days.

In the event of Washington’s failure to match the superior proposal, Dominion will be required to pay Washington a termination fee equal to $43.9m.

To partially fund the acquisition cost, Washington has received fully committed debt financing led by Credit Suisse with Citi, UBS Investment Bank and Natixis acting as joint lead arrangers.

Dominion chair of the board Jim Gowans said: “This offer is the result of a robust strategic review process and the Board unanimously agrees that this offer represents the best option available to Dominion shareholders, and recommends that shareholders vote in favour of this transaction.”

Image: Ekati Diamond Mine. Photo courtesy of Jason Pineau, photographer/WIkipedia.