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Battle for Gemfields Heats Up

Jun 21, 2017 7:19 AM   By Rapaport News
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RAPAPORT... Pallinghurst Resources has upped the ante in the bidding war for Gemfields by lowering the number of shareholder acceptances it needs for its offer to acquire the gemstone miner.

Pallinghurst dropped the “acceptance condition” to 60% from 75% following discussions with the UK’s Panel on Takeovers and Mergers, the private-equity group said Tuesday. This meant Pallinghurst was able to declare its $268.4 million (GBP 211.5 million) bid unconditional, since it already had agreements from 61% of shareholders — though Gemfields pointed out that the offer was still dependent on voters’ approval at Pallinghurst’s general meeting next Monday.

Gemfields’ independent committee has described the Pallinghurst bid as “derisory” and claimed it undervalues the company. In an update Wednesday, the miner said the terms of the offer meant shareholders might not grant Pallinghurst the necessary majority next week to go ahead with the deal.

A takeover by Pallinghurst, currently the miner’s largest investor, “would materially dilute Gemfields shareholders with inferior assets,” the miner warned. The committee also cautioned that Pallinghurst did not currently have enough shareholder backing to fulfill its plan to delist Gemfields from the London Stock Exchange’s Alternative Investment Market.

“The potential inability for Pallinghurst to delist the company [after closing the deal] would appear to be at odds with Pallinghurst’s rationale for the transaction,” the committee added.

China’s Fosun Gold is also in the running to buy Gemfields. On Tuesday, it raised its bid by 10% to $323.8 million (GBP 256 million). Gemfields’ management said the Shanghai-based group’s offer was unreasonable, but still recommended shareholders accept the deal, which it said was a better alternative to Pallinghurst’s proposal.
Tags: colored gemstones, Fosun, Fosun Gold, Gemfields, gemstones, M&A, mergers and acquisitions, mining, Rapaport News
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