Centamin rejects $1.9 billion offer from Endeavour Mining

December 4, 2019

Centamin Plc. announced that its board of directors rejected a $1.9 billion all-stock takeover proposal from Canada’s Endeavour Mining. 

Centamin, which owns the Sukari Mine and Cleopatra project in Egypt and exploration projects in West Africa, said the offer did not enough value to Centamin shareholders.

Endeavour announced its offer, a 13 percent premium to Centamin’s last closing price on Dec. 3.

“The terms of the proposal provide comparatively greater benefit to Endeavour’s shareholders and do not adequately reflect the contribution that Centamin would make to the merged entity,” Centamin said.

Reuters reported that the combined entity would have produced 1.2 million ounces of gold in 2019 at an all-in sustainable cost of $875 per ounce, which would make it one of the world’s largest and lowest cost miners, Endeavour said.

The gold industry has seen a flurry of deals over the past year as companies attempt to squeeze more value from operations after years of subdued activity and low returns.

Barrick Gold’s purchase of Randgold was followed by the Newmont and Goldcorp tie-up, and, more recently, the $1 billion takeover of Continental Gold by Zijin Mining Group.

Mark Burridge, fund manager at Baker Steel Capital Managers, which owns shares in Centamin and Endeavour, told Reuters that the deal was compelling because it would create a larger and “more investible” entity.

Centamin has struggled shifting from openpit to underground at the Sukari Mine and said in October it was looking for a new chief executive after its incumbent retired.

Endeavour said Sukari would also benefit from the fact that La Mancha — a private gold mining group chaired by Egyptian billionaire Naguib Sawiris — would become a key investor. The Sawiris family is Endeavour’s top shareholder with a 30 percent stake.

Endeavour first showed interest in Centamin in 2018 with a proposal that was promptly rejected. It then sent a formal proposal last month, hoping to engage with Centamin’s board.

The Canadian miner said Centamin’s board had refused talks without a so-called standstill agreement, which could restrict Endeavour’s options in pursuing a deal.

If Endeavour succeeds in its plans, its shareholders would own 52.9 percent of the merged entity, while the rest would be held by Centamin shareholders.

 

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