Category Archives: China

China’s Fosun sweetens the pot for offer on Gemfields

Emeralds and rubies miner Gemfields (LON:GEM) is encouraging its minority shareholders to accept an improved takeover bid from China’s Fosun International, despite considering it unfair, to avoid being bought-up by its largest shareholder.

The London-listed miner told investors Tuesday that while the terms of Fosun’s proposal are “not fair or reasonable,” the offer from South African private equity group Pallinghurst, Gemfields’ biggest shareholder, is even more “derisory.”

The precious stones miner has recommended shareholders to accept Fosun’s new offer, despite considering it “unfair” and “unreasonable.”Fosun Gold, a unit of Fosun International, increased Tuesday its offer for Gemfields to 45 pence per share from an earlier proposal of 40.85 pence per share. That’s an 18% premium compared to Gemfields’ share price before it first announced it had received an unsolicited bid.

The sweetened offer trumps Pallinghurst Resources’ rival bid of 38.5 pence to acquire the 53% of the coloured gems producer it does not already own.

Fosun chief executive Wang Qunbin said his company was impressed by Gemfields’ “long-term business potential, in particular in the China market”, adding that its cash offer provides a “compelling alternative” to Pallinghurst’s all-share bid.

Gemfields’ board did not share Qunbin’s enthusiasm, noting that Fosun’s new bid still represents an 18% discount to where the company’s shares traded only six months ago.

It also said it would to pay the Chinese miner a break fee of $2 million by way of compensation if a competing proposal becomes or is declared wholly unconditional.

Shares in the company jumped almost 5% in the first hour of trade in London to 43.50 p and while it lost a few points later, it was still 4.62% higher to 42.50 p by 3:00 PM local time.

Gemfields, which owns the luxury Fabergé jewellery brand, 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.

Last week, the company broke its own record by achieving the highest revenue from its latest auction of rough rubies.

Henry Sapiecha

China’s Fosun heats up control of Gemfields with 10% bid share premium

Actress Mila Kunis is Gemfields’ brand ambassador. (Photo by Mario Sorrenti. Courtesy of Gemfields.)

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.

Henry Sapiecha