Make Kitco Your Homepage

Snubbed Endeavour goes public with $1.92 billion Centamin merger attempt

Kitco News

Editor's Note: We are proud to unveil our new mining page, an entire space dedicated to up-to-the-minute news, with exclusive industry interviews and all the relevant information you need, rounded in up in one spot. Who is merging? Who is Buying? Who is Digging? We got you covered!

(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.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Precious Metal Charts

Follow Kitco News