Shares in Gemfields PLC (LON:GEM) slumped on Tuesday after Pallinghurst Resources revealed it has enough support from shareholders to push ahead with its plans to de-list the emerald and ruby miner.
Pallinghurst already owns a 47% stake in Gemfields and said on Monday evening that it had received acceptances from investors representing a further 28% of the shares in issue.
With just over 75% of Gemfields shareholders now agreeing to sell their stakes to Pallinghurst, the South Africa-listed company has enough backing to push ahead with its plans to de-list Gemfields.
The news comes a day after Pallinghurst shareholders voted in favour of the deal, which removed the last potential stumbling block and nullified a rival offer from Chinese conglomerate Fosun Gold.
The only question that remained was whether or not Pallinghurst could get enough backing from Gemfields investors to cancel the firm’s AIM shares, but this issue it has now put to bed.
Pallinghurst feels Gemfields has underperformed
Pallinghurst – run by former BHP Billiton plc (LON:BLT) boss Brian Gilbertson – lodged its “unsolicited offer” for Gemfields last month, claiming that the emerald and ruby miner had underperformed in recent years.
It wanted full control of Gemfields, arguing that the miner continues to be constrained by limited access to equity and debt capital, low liquidity in the trading of its shares, and a high cost base, which had affected its profitability.
Under the terms of its offer, each Gemfields shareholder is entitled to receive 1.91 new Pallinghurst shares for each Gemfields share, which works out at roughly 37p a share.
The firm believes the overhaul and integration of Gemfields would allow it to perform to its full potential.
Today’s news is unlikely to have gone down well with the current Gemfields board, which has repeatedly called the nil premium, all-share bid a “derisory” offer that undervalues the company.
The offer is open to Gemfields shareholders until 18 July.
Gemfields shares lsumped 13% to 31p on Tuesday afternoon.