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Snubbed Endeavour goes public with $1.92 billion Centamin merger attempt

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(Kitco News) - Endeavour Mining said today that it is seeking an all-share merger with Egyptian miner Centamin.

Centamin (TSE: CEE) is up 11.68% today to $2.20, while Endeavour Mining (TSE: EDV) is down 3.49% to $24.89.

Endeavour said it is trying to engage Centamin in discussion, saying it first reached out a year ago and submitted a formal proposal last month. Endeavour said its most recent proposal imagined a proposed exchange ratio of 0.0846 Endeavour shares for each Centamin share valuing Centamin at about C$2.522 billion (US$1.92 billion).

Endeavour said it is stymied and has been forced to take the offer public.

“We firmly believe that the proposed combination between Endeavour and Centamin provides a compelling value creation opportunity for both sets of shareholders which is superior to what can be achieved by each company on a standalone basis," said Michael Beckett, Endeavour's board chair. "Despite repeated good-faith attempts to engage with Centamin, our efforts have been frustrated by their refusal to entertain any discussions about a merger."

Centamin released a statement today stating that the offer undervalues the company.

"The board of Centamin has reviewed the proposal with its financial and legal advisers and believes, based on publicly available information on Endeavour, that the terms of the proposal provide comparatively greater benefit to Endeavour's shareholders, do not adequately reflect the contribution that Centamin would make to the merged entity and that Centamin is better positioned to deliver shareholder returns than the combined entity," said Centamin in a news release. "As a result, the board has unanimously rejected the proposal."

Endeavour is arguing for diversification and scale to do the deal. Sébastien de Montessus, president and CEO of Endeavour, accused Centamin of leadership lapses.

"We believe that the Centamin’s shareholders are currently disadvantaged by the Sukari mine being managed within a single-asset portfolio, by the recent operational challenges and the ongoing leadership transition at Centamin," said de Montessus. "There would be immediate potential benefits from integrating Sukari into a multi-asset portfolio that is managed with a long-term value focus and with La Mancha as a key cornerstone shareholder."

Centamin's Sukari Mine is the only gold mine in Egypt. The life of mine is 20 years, and annual production is about 500,000 gold ounces. The company also has exploration projects in Cote d’Ivoire and Burkina Faso.

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