China's Fosun spices up battle for Gemfields with 10% bid premium
Emeralds and rubies miner Gemfields (LON:GEM) may become the centre of a bidding war as China’s Fosun International has approached the company with an attractive offer, which comes only a month after the gems producer rejected a bid from its largest shareholder.
Gemfields, which owns the luxury Fabergé jewellery brand, believes its talks with Fosun will result in a cash offer at a "superior value" to Pallinghurt's unsolicited bid.
The proposal by Fosun Gold, a unit of Fosun International, values the London-listed company at £225 million ($288m), while South African private equity group Pallinghurst attempted to buy Gemfields in May at its current valuation of £195 million ($250m).
"Gemfields represents a compelling opportunity to continue to develop a leading gemstone producer with a dominant position in both global emerald and ruby production and a strong consumer brand," Fosun said.
Shares in the company shot up more that 13% in the first hour of trade in London reaching 40.31p by 2:25PM local time, just below the 40.85p offered by Fosun. That value represents 15.1% premium to the miner’s June 13 closing price, and a 10.1% premium to the current implied price per share contained in Pallinghurst’s offer.
Gemfields, which owns the luxury Fabergé jewellery brand, said it believes its talks with Fosun will result in a cash offer at a "superior value" to Pallinghurt's unsolicited bid, which remains open for acceptance until July 4.
The company repeated its call to shareholders to take no action after the Pallinghurst offer, which it said undervalued it.
Gemfields is the world's biggest coloured gems producer, accounting for roughly a third of the world’s emeralds and rubies from two mines in Mozambique and Zambia.