20 JUNE 2017 • 3:40PM
Chinese conglomerate Fosun has confirmed a bidding war for Aim-listed Gemfields, tabling an offer that values the ruby and emerald miner at £256m.
Fosun’s bid of 45p a share is higher than the £224m offer it mooted last week andconsiderably more than the nil-premium offer made by Gemfields’ majority shareholder Pallinghurst Resources last month, which put the miner’s value at around £211m.
The Chinese group spies an opportunity to serve growing demand at home for gemstones, as China’s middle class becomes increasingly affluent. Gemfields also owns the upmarket Fabergé brand.
Wang Qunbin, Fosun’s chief executive, said the company was “a long-term value investor” that had been attracted by Gemfields' “professional management "
Gemfields' Kagem opencast emerald mine in Zambia
Gemfield’s board - minus Sean Gilbertson, the son of Pallinghurst founder Brian - agreed to recommend Fosun’s offer to investors, despite saying it was “not fair and reasonable”.
“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,” the company said.
Pallinghurst already owns 47pc of Gemfields and claimed to have enough backing to take the company private, prior to absorbing it into its stable of other mining assets. Gemfields’ minority investors would then own shares in Johannesburg-listed Pallinghurst.
The Gemfields board had labelled Pallinghurst’s offer “derisory” but appeared destined to succumb to the bid until Fosun’s intervention. Pallinghurst has seven days to raise its bid or accede to the takeover.
Kieron Hodgson, an analyst at Panmure Gordon, said: "It is certainly at the level I think investors should seriously consider tendering to Fosun.
"Obviously shareholders and the board would like more, but at least now the offer is all-cash and above £250m it is within the range we would deem acceptable."
Gemfields shares jumped 4.6pc to 42.50p after Fosun’s offer was confirmed. The stock was as high as 56p in December.
*The ruby is mentioned several times in the Bible, is called "the king of precious stones" in India and was used by warriors in Burma to make them invincible. It is believed that ruby brings peace and success to the one who wears it. That is a lot of power for one stone, isn't it?
WHAT ARE THE SPECIFIC PROPERTIES OF A RUBY?
Vitality and Life Force:
With its rich fiery color, the ruby has the power to increase one's vitality, or life force (Chi). The fiery ruby can warm up one's energy, balance and strengthen it.
Protection and Wealth:
Ruby has always been associated with wealth (partially because it was a stone of the wealthy). It is also associated with protection from harm and thought to bring assurance and calm.
Love and Passion:
The ruby has a more extended use as an engagement and wedding stone than the diamond! Its energy evokes passion and love that does not fade away, thus it served as a perfect commitment stone.
