Fosun ready to takeover Gemfields and key gemstones assets in Africa

Fosun Gold Holdings’subsidiary plans a firm cash offer valuing Gemfields’ share capital at 256 million £ and that puts in good position the Chinese company to win the major world colored gemstones producer.

“The Fosun offer will be 45 pence in cash for each Gemfields Share, valuing Gemfields’s existing issued and to be issued share capital at approximately £256 million”, a release on Tuesday said.

Commenting on the offer, Mr. Wang Qunbin, Executive Director and Chief Executive Officer of Fosun said : “We have been persistently looking for investment opportunities which can combine global resources with China’s growth momentum and further develop industries related to health, happiness and wealth”.

Tuesday, 20 June, in a response to the firm offer announcement by Fosun Gold, the Independent Committee of Gemfields considered that the financial terms of the offer “are not fair and reasonable”.

“Notwithstanding the above, the Independent Committee are of the belief that the certain cash exit on offer from Fosun Gold is materially more attractive than the unsolicited all-share nil-premium offer” from Pallinghurst Resources Limited announced on 19 May 2017, the document said.

It went on to say : “Consequently, given the challenges that the Unsolicited Pallinghurst Offer poses to the independent future of the Company, and given the derisory nature of the Unsolicited Pallinghurst Offer, the Independent Committee intend to recommend that shareholders accept the Fosun Offer so as to secure a relatively more attractive outcome for their investment.

The recommendation is in line with the Independent Committee, the Chief Executive Officer of Gemfields Ian Harebottle and the Chief Financial Officer of Gemfields Janet Boyce who have irrevocably undertaken to do so in respect of their own shares.

The offer price represents a premium of 18 per cent. to Gemfields’s share price of 38.13 pence at the close of business on 18 May 2017, a premium of 10.8 per cent. to the Gemfields closing share price of 40.625 pence as at 19 June 2017.

Besides, it represents a premium of 18.2 per cent to the current implied share price of 38.08 pence of the offer of Pallinghurst Resources that the Independent Committee of Gemfields considered as an undervaluation of the company.

Pallinghurst owns 47.09% of the existing issued share capital of Gemfields and received valid acceptances from shareholders representing approximately 14.16% of the existing issued share capital of Gemfields.

Gemfields is AIM listed major gemstones company that owns Zambian emerald and amethyst assets, ruby assets in Mozambique and other gemstone interests in Madagascar and Ethiopia.

They key assets include the ownership of 75% of the Kagem emerald mine in Zambia, 75% of the Montepuez ruby mine in Mozambique, 50% of the Kariba amethyst mine in Zamabia and 100% of Fabergé Ltd, one of the world’s most recognised luxury brand names.