Endeavour Mining ends takeover talks with Centamin

Endeavour Mining (TSX: EDV) has walked away from a potential 1.47 billion lb. (US$1.9-billion) acquisition of Centamin (TSX: CEE; LON: CEY), citing lack of information on the targeted company’s assets.

The gold miner said the quality of the data shared by the Egypt-focused company during an accelerated due diligence process was “insufficient” to make an offer and as a result, merger talks have been terminated.

Under U.K. takeover rules, Endeavour has to wait six months before it can bid again for Centamin unless another party makes an offer, or it reaches a deal with the Egyptian miner.

“We remain convinced about the strategic rationale of combining Endeavour and Centamin to create a diversified gold producer with a high-quality portfolio of assets,” chief executive Sébastien de Montessus stated.

Centamin had rebuffed the all-stock takeover proposal from Endeavour in December, saying it did not offer enough value to its shareholders. The miner reiterated those reasons on Jan. 13, saying the offer materially undervalued Centamin and its prospects.

It also noted that the terms of the deal did not adequately reflect the contribution that it would make to the merged entity, adding that the company was better positioned to deliver shareholder returns than the combined entity.

The U.K.’s takeover panel agreed to extend an offer deadline for the Toronto-listed miner to allow more time for the two sides to engage and share information.

Endeavour, a West Africa-focused gold miner owned by Egyptian billionaire Naguib Sawiris, was seeking to gain control of Sukari, a 500,000 oz. per year gold mine and one of the world’s top-10 deposits of the yellow metal.

The operation, which entered production in January 2010 and is Egypt’s largest gold mine, consists of a large open pit and an underground portion.

Centamin has struggled with operational issues at the asset, however, which have weighed on its performance and on the company’s share price.

The company spent most of 2018 working on operational improvements on both sections, but they took longer than planned to materialize, which hit output.

The negative effects were short-lived. Centamin recently reported that gold production jumped 51% in the last three months of 2019. It noted that Sukari churned out 148,387 oz. gold in the fourth quarter, which is the mine’s strongest performance since the end of 2017.

A deal between the two companies would have created a mid-tier gold miner with an almost US$4-billion market value and annual output of more than 1.2 million ounces.

The transaction would have been one more of the many mergers and acquisitions that have swept the gold sector in the past year.

The frenzy, kicked off by the highly publicized, multibillion-dollar mergers of Barrick–Randgold and Newmont–Goldcorp (now Newmont [TSX: NGT; NYSE: NEM]) in early 2019, has picked up speed. China’s state-backed Zijin Mining offered US$1 billion for Continental Gold (TSX: CNL; US-OTC: CGOOF) in early December and Kirkland Lake Gold (TSX: KL; NYSE: KL) launched a US$3.7-billion offer for Detour Gold (TSX: DGC).

This article first appeared in our sister publication, MINING.com: https://www.mining.com/endeavour-mining-walks-away-from-takeover-talks-with-centamin/