The deal is to be satisfied by the issue of up to 214m new shares representing approximately 39.6 per cent of the enlarged capital of the group. Fabergé is currently owned by Pallinghurst Resources, a mining investment company, which will retain a 49.3 per cent stake upon completion.
Fabergé sells its jewellery through high-end retail outlets in London, New York, Geneva and Hong Kong. Theoretically, the Fabergé deal should allow Gemfields to maximise returns on its coloured gemstones through a dedicated 'value added' element. Presumably, less wholesale, more retail.
Gemfields' shares are up 265 per cent on our previous buy advice, but we will need to appraise any reorganisation of the combined entity before we make another definitive call. Hold at 36.5p.
Last IC view: Buy, 42p, 4 Oct 2012