One of Gemfields' own shareholders sold the Russian firm, best known for producing 50 jewelled eggs for Russian Tsars between 1885 and 1916.
If approved, the all-share deal will allow Gemfields to break into the luxury goods market and better compete with rival De Beers, famous for its diamonds.
The new company will be able to use the gemstones it mines in its jewellery, which can then be sold under the Faberge brand name.
Gemfields' chief executive Ian Harebottle said the deal would "provide exposure to the two most profitable segments in the gemstones value chain, namely mining and consumer sales".
He added: "Faberge is a globally recognised brand with a unique heritage, a history of excellence and a commitment to coloured gemstone products, sales and marketing.
"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."
The British firm, which mainly mines emeralds through its Kagem mine in Zambia, will issue up to 214 million shares in the deal, to be paid to Faberge shareholders.
Pallinghurst - which controls Gemfields alongside partners in another investor group as well as Faberge - will own 49.3% of the combined group.
Independent shareholders will vote on the deal next month.