Biggest shareholder makes unconsolidated bid to takeover Gemfields

gemfields

Leading supplier of responsibly sourced coloured gemstones, Gemfields, has received an unsolicited takeover offer from its largest shareholder, Pallinghurst Resources.

As part of a restructuring of its group, the Guernsey–based private equity firm has made an offer which, if approved and implemented, will result in Pallinghurst acquiring the entire issued and to be issued share capital of Gemfields not already owned by the Group.

If the acquisition goes through Pallinghurst announced it plans to delist Gemfields from the London Stock Exchange; focus on Gemfields’ core emerald operations in Zambia and ruby mine in Mozambique; explore strategic alternatives for Fabergé, the money-losing brand that was sold to Gemfields in 2012 by Pallinghurst; and slash costs across the group, particularly in management and administration

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The offer calls for Gemfields shareholders to receive 1.91 shares of Pallinghurst for their shares of Gemfields. In Pallinghurst’s statement, the company values each Gemfields share at 38.5p and the entire issued and to be issued ordinary share capital of Gemfields at around £211.5m.

Gemfields has advised its shareholders not to take any action at this time. In a statement the company said: “Pallinghurst has not engaged with the company with respect to the unsolicited offer and as such the Independent Board is reviewing the unsolicited offer with its advisers.”

Pallinghurst, which currently owns 47.09% of Gemfields, claims to have received support from holders of another 28% percent of the company’s shares. If this is true, 75% of current shareholders back the proposed deal.

However, newspapers are reporting that UK investors have reacted with fury at the “outrageous” deal, with an anonymous minority investor telling the Telegraph: “I’m personally very angry. Gemfields was doing well until its majority shareholder (Pallinghurst) sold it Faberge, which was loss

Shares in Gemfields rose 2.3% on Friday following Pallinghurst announcing its takeover bid.

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