AIM-Listed Emerald Producer Gemfields to Buy Faberge

on Nov 22, 2012

On 21 November 2012, the London-based emerald producer Gemfields (LON:GEM) announced its proposed acquisition of luxury jeweller Faberge. The deal, which values Faberge at $142 million (£89 million) is intended to provide Gemfields with direct control over a high-end luxury goods platform.

**Gemfields Announces Proposed Faberge Acquisition**
Faberge, which is most famous for its intricate jewelled eggs made for Russia’s last tsar, is to be merged into Gemfields, with the acquisition valuing the jeweller at approximately $142 million on the basis of a 30 day volume weighted share price as of November 20. Gemfields will issue up to 214 million shares as consideration for the deal, which will be paid to Faberge shareholders in proportion to their holdings in the business.

Reuters reports that the Faberge business is controlled by former BHP Billiton (LON:BLT ) boss Brian Gilbertson’s Pallinghurst’s investment company, with Pallinghurst Group also controlling Gemfields. As noted in Gemfields’ press release, following the acquisition, Pallinghurst will own 49.3 percent of the combined AIM-quoted group.
**Faberge Changing Hands**

Faberge, which has 170-year-long history, was founded by Gustav Faberge in 1842 and is best known for its 50 jewelled eggs commissioned by the Imperial Russian family from 1885 through to 1916. The 1917 Revolution in Russia, however, brought a violent end to the House of Faberge, with Bolsheviks shutting down all production.
!m[The Deal Values The Famous Easter Eggs Maker At $142 Million ](/uploads/story/878/thumbs/pic1_inline.png)After changing hands several times, in 1989, the Faberge business was acquired by Unilever (LON:ULVR) for $1.55 billion. In 2007, Pallinghurst bought the business for $38 million, and reunited the name with the Faberge family, as reported by Reuters. Faberge was relaunched in 2009, with its first collection since 1917, and currently has outlets in London, Geneva, New York and Hong Kong.

Gemstone Champion
The Financial Times reports that since 2008, Faberge has made a cumulative loss of about $70 million. Gemfields’ CEO Ian Harebottle, however, insists that the proposed tie-up could help unlock the potential of both businesses. “Unilever had a huge value but then destroyed it,” noted Mr Harebottle, as quoted by the FT.
Gemfields, which mines mainly emeralds through its Kagem mine in Zambia, is looking to create “a globally recognised coloured gemstone champion,” as noted in the company press release. Mr Harebottle commented that the proposed acquisition of Faberge enhanced Gemfields’ potential to be recognised as the leading company for coloured gemstones. “We have the opportunity to acquire what is certainly I believe, a brand with exceptional heritage … having been the brand that has provided jewellery to kings and queens, princes, tsars and leaders of the world over many many years,” Mr Harebottle noted, as quoted by Reuters.

Faberge’s managing and creative director, Katharina Flohr, in turn commented that the combination between both businesses presented a unique platform for the development of coloured gemstone products in global markets. “Both businesses are fortunate to share the same vision and to recognise the exciting long term opportunity that exists within the combination of the coloured gemstone and luxury goods markets,” noted Ms Flohr in Gemfields’ press release.


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