Gemfields buys Faberge to create gem champion

LONDON Wed Nov 21, 2012 6:20am EST

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LONDON (Reuters) - Gemfields (GEM.L) is to buy luxury jeweler Faberge from one of the colored gem miner's own shareholders, in a deal valuing the maker of lavish Easter eggs for Russia's last tsar at $142 million.

The all-share deal, if approved by minority investors, will create an integrated company that mines colored stones and uses the Faberge brand to promote their use in jewelery.

A 170-year-old jeweler controlled by former BHP Billiton boss Brian Gilbertson's Pallinghurst investment company, Faberge was relaunched in 2009, with its first collection since 1917.

Bringing Faberge into the Gemfields fold is in line with the miner's aim of emulating the diamond producer De Beers, which has successfully promoted diamonds for decades, championing the diamond engagement ring from London's Bond Street to China.

"We have the opportunity to acquire what is certainly I believe, a brand with exceptional heritage ... having been the brand that has provided jewelery to kings and queens, princes, tsars and leaders of the world over many many years," Gemfields Chief Executive Ian Harebottle said.

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 Faberge.

Pallinghurst - which controls Gemfields alongside partners in investor grouping Rox, and also controls Faberge - will own 49.3 percent of the combined group. Rox, which currently has a combined 63 percent in Gemfields, will disband.

Independent shareholders will vote on the deal and the necessary issue of shares by Gemfields next month.

Faberge, all but frozen during a decades-long fight over the use of the name, currently sells its luxury jewelery through five boutiques and retail concessions in Geneva, New York, London and Hong Kong. It wants to open an average of two new stores per annum over the next ten years.

The jeweler, founded by Gustav Faberge in 1842, is best known for the success of the 50 jeweled eggs commissioned by the Imperial Russian family from 1885 through to 1916.

The Russian Revolution brought a violent end to the House of Faberge, when the Bolsheviks seized the workshops, closed down all production and the family fled.

After changing hands on two further instances, Faberge Inc was purchased by Unilever Plc (ULVR.L) for $1.55 billion in 1989. In 2007, Pallinghurst acquired a portfolio of Faberge trademarks, licenses and associated rights from Unilever and reunited the name with the Faberge family.

Faberge reported revenue of $6.97 million for the year ended March 31.

Gemfields mainly mines emeralds through its Kagem mine in Zambia, but also has interests in ruby and sapphire deposits.

The stock was down 5.1 percent at 37 pence at 1050 GMT.

(Writing by Clara Ferreira-Marques; editing by Anna Willard)

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