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Pallinghurst shareholders overwhelmingly approve Gemfields takeover bid

Despite suggestions last week that it might struggle to drum up the necessary support, 96% of Pallinghurst investors have backed the takeover
shark circling fish made out of money
Pallinghurst has already received acceptances from shareholders representing 61.25% of Gemfields, but it needs to get 75% if it wants to de-list the miner

Pallinghurst Resources has received the overwhelming support of its shareholders to press ahead with its bid to acquire the rest of Gemfields PLC (LON:GEM) it doesn’t already own.

South Africa-listed Pallinghurst needed the backing of at least 50.1% of its investors to back the all-share, nil-premium offer.

Despite suggestions last week that it might struggle to get this number, Pallinghurst actually received a whopping 96% of the vote.

Given that it already has 61.25% of Gemfields shareholders on board as well, above the 60% minimum, the offer is now wholly unconditional.

It also means that the rival bid from Fosun Gold is null and void as the Chinese conglomerate was only interested if it could get at least 50% of the miner.

Market sources said Fosun was now weighing its future options following the vote.

“With more than 96% of the voting shares in favour of the Gemfields acquisition, Pallinghurst's management has been given a clear and emphatic mandate,” said Pallinghurst chief executive Arne Frandsen.

“As management, we value and respect this vote of confidence from our shareholders, and will carry out this mandate without delay.”

Pallinghurst looking for 75% of Gemfields investors to support its bid

Pallinghurst is currently the biggest shareholder in Gemfields, with a 47.1% stake.

Another 14% or so of Gemfields investors have so far accepted its offer of 1.91 Pallinghurst shares in return for each Gemfields share – which works out roughly at 38.1p a share.

At the moment, that’s only enough for it to be the majority shareholder. What it is hoping for is that more Gemfields investors will take it up on its offer between now and 18 July – the deadline for acceptances.

If it can get to 75%, that would allow it to formally de-list Gemfields from AIM, collapse its own investment structure, simplify its management arrangements and possibly convert into a mining company.

Gemfields advising shareholders to take no action

Shortly after the announcement, the Gemfields board released a response, where it once again said the offer “significantly undervalues” the company.

It also noted that, as yet, Pallinghurst doesn’t have the 75% required to de-list Gemfields and “strongly” advised shareholders to take no action.

Gemfields shares dipped 4% in late afternoon trading to 35.5p.

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