Angry minority shareholders in the UK of coloured gemstone producer Gemfields Plc have rejected an unsolicited takeover bid by Pallinghurst Resources, which already owns 47 percent of the coloured gemstone mining firm.

The minority shareholders have called for the independent directors on Gemfields’ board to fight the bid strongly, saying the bid in essence would allow Pallinghurst to buy the company for nothing.

Analysts have said that the bid, which values Gemfields at £211 million ($274 million) is an undervaluation and that a reasonable valuation would be in the £250-£275 million ($325-$357 million).

The Pallinghurst bid would see Gemfields delisting from London’s AIM exchange, though Johannesburg-listed Pallinghurst itself may seek a secondary listing on the main London market. Pallinghurst says the bid would allow Gemfields to “reach its full potential”, observing that it now suffers from high costs and poor liquidity on the London market.

Investors on their part say that Gemfields suffers from poor liquidity because Pallinghurst holds 47 percent. They also say that the miner has suffered from high costs and poor financial performance due to the Fabergé brand, which was sold to Gemfields by Pallinghurst. Fabergé has been bleeding ever since Gemfields acquired it and some analysts say it has cost the miner $58 million since the acquisition.

Others have pointed out that the Pallinghurst offer does not value the Gemfields gemstone stockpile, which could be worth up to $100 million.

The Gemfields board has asked shareholders not to take any action while it considers the offer.

https://www.gemkonnect.com/news/gemfields-undervalued-pallinghurst-takeover-bid-say-shareholders