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Coloured stones specialist Gemfields (LON:GEM) this morning unveiled an £89mn deal to acquire Fabergé, one of the most iconic names in jewellery.
The all-share transaction further advances Gemfields’ mine-to-market strategy and gives the group a big foothold in two of the most profitable segments of the industry – mining and consumer sales.
Chief executive Ian Harebottle told investors: “Fabergé is a globally recognised brand with a unique heritage, a history of excellence and a commitment to coloured gemstone products, sales and marketing, all of which is perfectly demonstrated by the magnificent Romanov necklace crafted from 2,225 emeralds and diamonds and unveiled earlier this year.
“The proposed acquisition is transformational for the company, our team and our shareholders and has the potential to deliver significant value, expanded growth and diversification opportunities to the company and our shareholders.”
To pay for the ambitious purchase, Gemfields, which owns Kagem, the world’s largest emerald mine, is issuing 214mn new shares, or the equivalent of almost 40% of equity base.
The takeover will also see the unbundling of Rox, Gemfields’ largest shareholder at 59.1%, into its component investors.
As a result Brian Gilbertson’s Pallinghurst investment vehicle will become the company’s largest individual investor with just under half the shares.
Pallinghurst, which bought Fabergé from Unilever for US$38mn in 2007, has invested over US$160mn into cleaning up the Fabergé brand over the last five years.
In a conference call, Harebottle said the response from independent shareholders to the deal was overwhelmingly supportive, with one comparing the deal to “one of the small car manufacturers acquiring Mercedes Benz”.
The CEO said that buying Fabergé creates an opportunity for Gemfields on a long-term, sustainable basis “to be to some extent masters of our own destiny and have a stronger influence over the continuous and sustainable positioning of coloured stones, preventing them from being accessible to the whims of fashion designers”.
Harebottle added: “In other words, what we don’t want is this season’s colour to be green and next red.
“Diamonds have done a sterling job of going beyond that and we believe colour has the opportunity to do the same and to be perceived from a value perspective on par with diamonds. This is part of the process of getting there.”