Gemfields announced its proposed acquisition of a 100% interest in Fabergé Limited with a view to creating “a globally recognised coloured gemstone champion”.
The announcement comes after a successful 18 months of growth for Gemfields as a global player in the mining and fine jewellery sectors, and the re-launch of Fabergé in the luxury watch marketplace.
Fabergé is now set to provide Gemfields with direct control over a high-end luxury goods platform and a global brand with an exceptional heritage.
The proposed acquisition values Fabergé at approximately US$142 million (£89 million) and will be paid by issuing Gemfields shares. It will be finalised following shareholder approval at the company’s AGM to be held in December 2012.
Gemfields has outlined the acquisition highlights, stating that the acquisition of Fabergé will position it and Gemfields as leading UK-based coloured gemstone miner, and a global iconic luxury brand with an exceptional heritage operating in the two most profitable segments within the gemstone supply chain.
The acquisition is also set to position Fabergé as a coloured gemstone retailer of choice within the luxury retail sector, while Fabergé will benefit from marketing, communication, management and supply synergies to deliver operational efficiencies.
Ian Harebottle, Gemfields chief executive, said: “Gemfields has firmly established itself as “the Coloured Gemstone Mining Company” and the proposed acquisition of Fabergé further enhances our potential to be recognised as the leading coloured gemstone company.
“It provides exposure to the two most profitable segments in the gemstones value chain, namely mining and consumer sales. Fabergé is a globally recognised brand with a unique heritage, a history of excellence and a commitment to coloured gemstone products, sales and marketing, all of which is perfectly demonstrated by the magnificent Romanov necklace crafted from 2,225 emeralds and diamonds and unveiled earlier this year.”
Harebottle added that the proposed acquisition is “transformational for the company, our team and our shareholders”. He said the partnership has the potential to deliver significant value, expanded growth and diversification opportunities to the company and its shareholders.
Katharina Flohr, managing and creative director at Fabergé, added: “The combination with Gemfields presents a unique platform to further develop coloured gemstone products in new and existing 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. Gemfields’ leading market position is in part due to its ability to supply ethically produced coloured 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.”
Through consolidating both brands Gemfields is potentially creating a platform to further increase the company’s market share within the coloured gemstone sector, while gaining exposure to luxury sector multiples and greater influence over product positioning and consumer awareness.
As a mining company it will continue to sell its rough coloured gemstone production through its established auction platform.
The enlarged group, incorporating Fabergé, will remain listed on AIM and managed from London. It will have approximately 1,150 employees across the United Kingdom, United States, Switzerland, Zambia, Mozambique, India and China.
The acquisition will also provide “a strong platform” for the company’s intended move to the premium listing segment of the UKLA’s Official List and to trading on the main market of the London Stock Exchange
Fabergé is said to be poised for growth, with revenues growing 367% in the financial year to 31 March 2012. In the financial year to 30 June 2012, Gemfields’ revenues were up 108% to US$83.7 million with profit before tax and exceptional items up 140% to US$47.8 million
Harebottle added: “Gemfields has made excellent strides in its coloured 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 recognised 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 coloured gemstones, actively championing the coloured 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.”
Canaccord has been selected as the nominated adviser and financial adviser and J.P. Morgan Cazenove is acting as financial adviser to Gemfields in connection with the proposed acquisition.