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Gemfields bidding war tipped to rumble on even if Pallinghurst investors back nil-premium offer on Monday

Pallinghurst needs shareholder approval if it wants to push ahead with its offer for Gemfields, but market sources think that still might not be the end of the bidding war

emerald in the ground
If Gemfields shares are anything to go by, a Pallinghurst victory looks most likely

Next week looks set to be a pretty big one for Gemfields PLC (LON:GEM) and its investors.

Pallinghurst Resources’ nil-premium offer already has the backing of 61.25% of Gemfields shareholders, which is more than the 60% required to make the bid unconditional.

Now South Africa-listed Pallinghurst – which already owns 47% of the emerald miner – needs the backing of its own shareholders, who are set to vote on the deal on Monday (26 June).

Pallinghurst claims to have enough investor support

Pallinghurst has repeatedly said it has irrevocable undertakings – i.e. binding, irreversible agreements – from 50.3% of its shareholder base, which would be enough to push the deal over the line.

Should that be the case, Pallinghurst would have the necessary backing from both sides to take majority control of Gemfields.

It would also nullify a rival 45p a share cash offer from Fosun Gold, which the Chinese conglomerate has previously said is only valid if it can take at least a 50% stake in Gemfields.

So that should be that. If Pallinghurst gets 50.3% of the vote which it claims is in the bag, its offer would be successful and Fosun’s bid would fall away.

But some think the vote and subsequent deal might not be that straightforward.

Both Gemfields and Fosun have this week disputed Pallinghurst’s level of support, claiming that “there is the possibility that Pallinghurst will not receive the necessary majority to pass the ordinary resolution”.

‘All to play for’ regardless of Monday’s vote outcome

The word from people close to the deal is that, despite Pallinghurst’s claims, Monday’s vote is far from a forgone conclusion.

Perhaps most interestingly is that market sources also think the battle for Gemfields could still be ‘all to play for’ even if Pallinghurst does get the majority it needs next week.

The suggestion is that regardless of whichever way the vote falls on the day, it might not be the last we hear of this particular tug-of-war.

For its part, however, Pallinghurst remains confident that it will get the necessary support from its shareholders to increase its stake in Gemfields.

All should become clearer on Monday, albeit for just a short while perhaps.

Share price suggests Pallinghurst win

If the share price is anything to go by, there doesn’t seem to be too much confidence from Gemfields investors that the Fosun offer is a likely victor in this war.

After topping out around the 42p on the news of the offer, shares have fallen back to 39p over the past couple of days just above Pallinghurst’s implied bid of 38.1p or so.

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