(Adds comment from Washington Cos president, share reaction, context)
By Nicole Mordant
March 21 (Reuters) - Dominion Diamond , target of a $1.1 billion unsolicited bid, should run a formal sales process for the company and open its books to what could be several interested parties, Dominion's biggest shareholder told Reuters on Tuesday.
The board of Dominion, the world's third-largest diamond producer by value, has a responsibility toward its shareholders to consider the proposal from U.S.-based The Washington Companies, as well as possible other bids, Jamie Horvat, fund manager at M&G Investments said.
M&G owns around 11 percent of Dominion, Horvat said.
"The best outcome for the owners right now is to do a proper strategic review, have people sign up who are interested," London-based Horvat said by phone. "Maybe others will come out of the woodwork," he said.
Dominion was not immediately available for comment.
On Sunday, The Washington Companies, a group of privately held North American mining, industrial and transportation businesses founded by billionaire Dennis Washington, revealed it had made a $1.1 billion all-cash proposal for Dominion.
In response, Dominion said its board had considered Washington's proposal, but that the terms of the proposed talks were unacceptable.
Dominion shares were up 2.0 percent at $12.45 on the New York Stock Exchange on Tuesday, still below the $13.50 a share offer price that Washington proposed.
Washington said on Sunday that the talks with Dominion had ended. On Tuesday, Larry Simkins, Washington's president, told Reuters it was up to Dominion and its shareholders to make the next move.
"We're absolutely waiting for the board of directors and the shareholders on determining what our next steps are," Simkins said in an interview.
He declined to say whether Washington may take a formal bid directly to shareholders. Washington currently owns no shares in Dominion, Simkins said.
M&G's Horvat said Dominion should allow Washington and others to do due diligence on the miner under proper terms and then "go ahead with the best offer." He said he expected this would happen.
"I think the board is going to do the right thing. They have good advisors, they are smart people," he said.
Analysts said on Monday that there were several "logical" potential suitors for Dominion including global mining giant Rio Tinto and Anglo American-owned diamond giant De Beers. Anglo and Rio declined to comment late on Monday.
Reuters reported on Monday that smaller Canadian diamond miner Stornoway Diamond Corp had held merger talks with Dominion in recent months (Reporting by Nicole Mordant in Vancouver; Editing by Denny Thomas and Leslie Adler)