Private equity company, Pallinghurst Resources, has made an unsolicited offer for the 53% of shares in Gemfields it does not already own.
Pallinghurst, based in South Africa, specializes in investments in the mining sector. It is offering approximately $150 million in its shares for the remaining stake in Gemfields, a London-based colored gemstone mining and marketing company, making it a core component of Pallinghurst’s value.
Pallinghurst’s offer doesn’t provide any added value to Gemfields, which it values at approximately $295 million.
Gemfields Board, in a statement to shareholders, “strongly advises … to take no action at this time.” However, Gemfields shareholders owning 28% of the company had already agreed to the offer, Pallinghurst says, giving it 75 percent backing and making the offer unconditional.
Gemfields has had a high-profile in recent years both within the jewelry industry and with consumers, providing its responsibly sourced emeralds, rubies and amethysts for well-known jewelry designers and having its gems appear on red carpets around the world. It also provides its gems to the luxury brand, Fabergé, which it owns.
However, the company, listed on London’s Alternative Investment Market (AIM), isn’t profitable. Pallinghurst wants to change this by restructuring both Gemfields and its relationship with Pallinghurst.
Gemfields in its current form was created in 2008 when Pallinghurst and its co-investors contributed the Kagem emerald mine to Gemfields, its core operating asset, for shares. This transaction made Pallinghurst and its co-investors the majority shareholders of Gemfields. In 2013, Pallinghurst added the luxury brand, Fabergé, to Gemfields holdings, increasing Pallinghurst group’s direct ownership in Gemfields to the current level of 47.09%.