Gemfields committee recommends Fosun offer despite calling it ‘unreasonable’

JOHANNESBURG (miningweekly.com) – Emerald miner Gemfields on Tuesday said Fosun Gold Holdings’ cash offer for all the shares in Gemfields at 45p apiece – totalling £256-million – was unfair and unreasonable.

Fosun Gold on Tuesday morning raised its offer for Gemfields, with the offer representing a premium of 18% to Gemfields' share price of 38.13p at the close of business on May 18, the last business day before Pallinghurst Resources made its $150-million offer to acquire the shares in Gemfields it does not already own.

An independent Gemfields committee believed that certain cash exit on offer from Fosun Gold was materially more attractive than the unsolicited all-share nil-premium offer from Pallinghurst.

It noted that the Fosun offer was at an 18.2% premium to the implied value of the one from the Pallinghurst offer, which could dilute Gemfields’ shareholders with inferior assets that offer exposure to more volatile commodities and with less attractive prospects.

Pallinghurst has announced that it has secured irrevocable undertakings that require certain Gemfields shareholders to accept its offer, which, when taken together with Pallinghurst's current holding in Gemfields, would result in the company exceeding the 75% acceptance condition.

In this event, the offer would become unconditional as to acceptances and, in the event that the offer was to become unconditional in all respects, Pallinghurst have stated that they intend to delist the company from Aim.

Consequently, given the challenges that the Pallinghurst offer poses to the independent future of the company, and given its derisory nature, the independent committee intend to recommend that shareholders accept the Fosun offer to secure a “relatively more attractive outcome” for their investment.