Gemfields advises shareholders to approve a raised bid by Fosun Gold - despite calling it unreasonable

Courtney Goldsmith
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Picture taken 21 May 2007 shows Italian...
Gemfields tells minority shareholders to side with a takeover bid which it called unfair and unreasonable (Source: Getty)

Faberge owner Gemfields today recommended shareholders approve a raised takeover offer by Fosun Gold as the lesser of two evils vying for ownership of the company.

China's Fosun Gold today increased its bid to £256m from an offer of £224.6m made last week.

Shares in Gemfields, which mines emerald, ruby and amethyst, popped on the news. In afternoon trading shares were 4.62 per cent higher at 42.5p.

The proposed offer represents a premium of 10.8 per cent to Gemfields' closing share price of 40.625p yesterday. It also adds a premium of 18.2 per cent to the current implied price of 38.08p per share offered by a rival bidder.

South African private equity group Pallinghurst, Gemfields' largest shareholder, put forward an offer to buy the remaining 52.91 per cent of the company it doesn't own last month, but the precious stone miner argued that "significantly undervalues" the company.

Gemfields' independent committee said it considers the financial terms of Fosun's offer to be "not fair and reasonable". However, the committee believes it is "materially more attractive than the unsolicited all-share, nil-premium offer from Pallinghurst".

Pallinghurst has said it intends to delist Gemfields from London's Alternative Investment Market (Aim).

Given the nature of Pallinghurst's "derisory" offer, Gemfields' committee intends to recommend shareholders to accept Fosun's bid, it said.

Read more: Gemfields loses its sparkle as production goals slip

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