The battle for control of Gemfields, a London-listed African miner of emeralds and rubies, took an unexpected turn as China’s Fosun Gold said it could make a possible cash offer for the company, potentially derailing a nil-premium all-share bid by JSE-listed Pallinghurst Resources.

Gemfields set up an independent committee to study the Pallinghurst offer of 1.91 of its shares for each one held in Gemfields. The committee said the offer from its 47.09% shareholder was "derisory" because it undervalued the company and sought options to raise its value.

Gemfields said Fosun Gold had approached the company and it had "actively engaged" the Chinese company in talks, which had resulted in Fosun proposing a possible offer of 40.85p a share cash for Gemfields, which represented a 15% premium to Tuesday’s closing price and, importantly, a 10.1% premium to the implied Pallinghurst offer of 37.1p.

"A cash offer would be preferable, particularly at a premium price as UK investors would not be forced to accept paper from Pallinghurst, which is South African-listed," said John Meyer, an analyst with London-based SP Angel.

Pallinghurst launched its offer for Gemfields on Tuesday. It closes on July 4. It has said it secured "irrevocable undertakings" from the holders of 28.18% of Gemfields in support of its offer, giving it 75.27% of the issued share capital and triggering a mandatory offer to minorities.

Meyer raised the question whether the share owners backing Pallinghurst would continue to support the JSE-listed investment holding company’s offer.

"We do not know if key investors have signed soft or hard irrevocables with Pallinghurst. We do understand that the irrevocable undertakings fall away in the event of a bid, which is at more than 10% to the Gemfields share price.

"We expect Fosun Gold to come through with a bid in the next few days at a sufficient premium to allow key investors to accept this offer," Meyer said.

Pallinghurst CEO Arne Frandsen said on Wednesday that the company would wait to see whether a Fosun offer actually materialised. "Like you, I saw that Fosun Gold may or may not make an offer, subject to due diligence. Let’s see where they end up," he said.

Gemfields shareholders liked the news of the potential offer, driving the share up more than 13% to 40.25p. Gemfields mines emeralds in Zambia and rubies in Mozambique and has been actively building a market for these gemstones.

Pallinghurst’s share price rose 3% to R3.25 on Wednesday.

Fosun, which is listed in Hong Kong, said there was no certainty that it would make a formal offer for Gemfields.

"A key element of Fosun’s strategy is to leverage Chinese and global consumer growth trends to maximise value for its investors.

"Fosun sees the consumer market globally, but particularly in China, to have huge potential and has a number of consumer-facing businesses that would be complementary to an investment in Gemfields," it said.

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