Gemfields plc announced today that Fosun Gold Holdings Limited has made an initial proposal of a “possible cash offer” to the independent committee of the Board of Gemfields.

The offer pertains to acquiring “the entire issued and to be issued ordinary share capital of Gemfields” at a price of 40.85 pence per Gemfields share, which amounts to a 15.1 per cent premium on Gemfields closing price of 35.50 pence as at 13 June 2017; and a 10.1 per cent premium to the current implied price per share of the offer by Pallinghurst Resources Limited of 37.10 pence.

A China-based holding company, Fosun is mainly active in the three business segments of health, happiness and wealth. Founded in 1992 in Shanghai, Fosun International was listed on the Main Board of the Hong Kong Stock Exchange on 16 July 2007. As at December 31, 2016, Fosun's total assets exceeded RMB 480 billion. 

“Fosun has several significant investments in the UK, including ownership of nursery brand Silver Cross and an investment in the Thomas Cook travel group,” a press release from Gemfields said. “Fosun's interest in these companies, as with its interest in Gemfields, is driven by its strategy of bridging the gap between the huge Chinese consumer market and quality brands and products from other regions of the world.”

In May 2017, Fosun announced a US$ 887 million strategic investment into Polyus Gold, one of the world's largest gold producers, further increasing its exposure to the global natural resources sector.

Gemfields added: “Fosun has met with the Gemfields management team and has been extremely impressed with their experience and vision for the company. The improvements that the incumbent management team have been able to achieve since taking control of the business have been consistently demonstrated over a number of years and Fosun is confident that it can integrate them into its broader global team to position Gemfields to have the scale to fully exploit the consumer growth and luxury good trend both in China and globally that both parties expect to continue.”

The press release said further: “Fosun Gold notes that its proposal does not constitute a firm intention to make an offer under Rule 2.7 of the Code. The announcement of any such firm intention to make an offer by Fosun Gold is subject to the satisfaction of confirmatory due diligence. Fosun Gold reserves the right to waive this pre-condition to the announcement but notes that there can be no certainty that a formal offer will be made, even if the pre-condition is satisfied or waived.”