Pallinghurst to delist Gemfields from UK as wins takeover battle

Brian Gilbertson, outgoing chairman, Gemfields

PALLINGHURST Resources has won the battle for Gemfields after a sufficient number of the coloured gemstones miner and marketing firm’s shareholders supported Pallinghurst’s all-scrip offer – enough for it to be delisted from the London Stock Exchange.

As of 5.30pm in London, some 37.35% of Gemfields minority shareholders had accepted the Pallinghurst offer which valued the company at $268m compared to a rival $311m cash offer by Fosun International, a Chinese company.

Including Pallinghurst’s existing 47% stake in Gemfields, a total of 75.18% of Gemfields shareholders had bought into the offer exceeding the 75% majority required to delist Gemfields. Pallinghurst urged Gemfields shareholders to sell into its offer in which it has proposed 1.91 new Pallinghurst shares for each Gemfields share.

An independent committee formed by Gemfields was able to attract a 45 pence per share rival bid from Fosun International whose subisidiary, Fosun Gold, offered to open up new business lines to the Chinese jewellery market.

The committee argued that in accepting Pallinghurst shares, Gemfields shareholders were swapping out for a less liquid stock in a company exposed to riskier commodities than coloured gemstones including iron ore and platinum.

Pallinghurst’s contention was that it had long supported Gemfields management without seeing a commensurate improvement in its performance or share price. It wanted to consolidate its stake in Gemfields as a step in becoming an operating company whereas it currently has a private equity firm structure.

Pallinghurst said its offer would remain open for acceptances for a further 14 calendar days following the first closing date which is scheduled for 1pm London time on July 18.

Pallinghurst is led by Brian Gilbertson, chairman, and Arne Frandsen who is CEO of the company. The company is invested in a manganese mine in South Africa’s Northern Cape and Sedibelo Platinum Mines, an unlisted platinum group metal firm.

4 COMMENTS

  1. “Out of the frying pan and into the Fire!” Poor Gemfield shareholders are moving from the management of Gemfields to the management of Gilbertson & son. Way more expensive and less competent. Time will tell on this debacle but in many ways minorities at Gemfields had no choice, Pallinhurst have always controlled it. It simply looks like a maneuver for Gilbertson & son to secure a future revenue stream. So obvious and disgusting!

  2. Pallinhgurst an “operating company”! This sounds like Gilbertson’s next card trick on shareholders. Pay him and his 5 useless partners to “operate” assets that already have management in place. It’s his maneuver for the next few years to rip further money off docile investors who still think he’s the doyon of the mining industry. He’s washed up with a track record of taking advantage of his shareholders. His trick can only be pulled so many times in one town and this town has seen it to many times. Retire Brian!

  3. Why does Pallinghurst need such expensive management if all it’s investments have management already and two out of three investments are less than 10% stakes in other entities that have effective management. Don’t understand how investors approve this sort of deal when they could simply have unbundled the holdings after ten awful years of performance?

  4. The Pallinghurst shareholders deserve what they get, a 5 man team pulling R39m in salaries per annum ($3m), plus another R39m if the share price moves by 25%. Add to this 10% of the equity of the company issued (to them alone) over 4 years…. its corporate greed at its best. Well done brian for screwing shareholders at Gemfields as well as in Pallinghurst (the Gemfields shareholders get screwed twice – once forded into Pallinghurst and then again with the fees & equity dilution). Zuma, Gupta and Gilbertson – cut from the same cloth….

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