Gemfields plc moved to acquire Fabergé Limited in an all share deal and as part of a larger plan of increasing its colored stone market share. If Fabergé investors approve of the acquisition, the deal would provide Gemfields with direct control over a high-end luxury goods platform coupled with brand heritage.

Gemfields proposed issuing 214 million new ordinary shares for the company, representing approximately 39.6 percent of the enlarged issued share capital, which  values Fabergé at approximately $142 million (GBP 89 million), on the basis of a 30-day volume weighted share price and $133 million on the basis of the price of ordinary shares at market close on November 20. Assuming the merger completes in early 2013, Fabergé is expected to have at least $10 million in cash and no debt, Gemfields stated.

The proposal is conditional upon approval of independent shareholders of Pallinghurst Group; the restructuring of Faberge's largest shareholder, Rox;  insider approval and admission of the consideration shares to trading on London's AIM. The proposal advances Gemfields’ “Mine and Market” corporate strategy creating a colored gemstone champion and positions Fabergé as the colored gemstone retailer of choice, within the hard luxury retail sector, according to the mining firm.

Gemfields will continue to sell its rough colored gemstone production through its established auction platform, while the enlarged group would be managed from London, employ about 1,150 across the U.K., U.S., Switzerland, Zambia, Mozambique, India and China.

Ian Harebottle, the chief executive of Gemfields, said, “Gemfields has made excellent strides in its colored gemstones mining and marketing initiatives, which will remain core to our business. However, we are confident that we will be able to put the new and exciting opportunities and natural synergies, that a globally recognized brand of Fabergé’s standing is able to offer us, to good use. I have no doubt that Fabergé will help to further accelerate demand for Gemfields’ ethically sourced premium colored gemstones, actively championing the colored gemstone industry and providing a directly-controlled showcase for our finest gems. We look forward to moving into what is a considerably larger and grander market space than that which was previously available to the Gemfields brand.”

Katharina Flohr, the managing and creative director at Fabergé, added, “The combination with Gemfields presents a unique platform to further develop colored gemstone products in new and existing global markets. Both businesses are fortunate to share the same vision and to recognize the exciting long term opportunity that exists within the combination of the colored gemstone and luxury goods markets. Gemfields’ leading market position is in part due to its ability to supply ethically produced colored gemstones on a large scale but is also due to its extensive marketing initiatives, both of which are certain to be developed further by Fabergé, to the benefit of both companies and the sector as a whole.”

RAPAPORT