Centamin rejects £1.5bn buyout proposal from Canada's Endeavour
Gold miner Centamin said on Tuesday that its board had unanimously rejected a £1.47bn takeover offer from Canada’s Endeavour Mining.
Endeavour had offered 0.0846 of its shares for each Centamin share, or around 127p a share.
Centamin said in a statement 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 it is better positioned to deliver shareholder returns than the combined entity.
"As a result the board has unanimously rejected the proposal. Centamin will be making a further announcement with its detailed response in the near future," it said.
Endeavour said it had decided to make its proposal public after several unsuccessful attempts to engage with Centamin’s board.
Michael Beckett, chairman of the board of directors of Endeavour, said: "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.
"Despite repeated good faith attempts to engage with Centamin, our efforts have been frustrated by their refusal to entertain any discussions about a merger before entering into a standstill agreement. A standstill would have the effect of precluding us from taking the proposal to shareholders if the proposal was not seriously considered by Centamin. We have therefore decided that, due to the strong merits of the mand its potential to create value, it is necessary to make public our proposal so that the voices of shareholders are heard."
At 1010 GMT, Centamin shares were up 7.8% at 120.91p.
Russ Mould, investment director at AJ Bell, said: "By going public, Endeavour will hope that Centamin’s shareholders support its plans and put pressure on the target’s management to start holding proper discussions with the suitor.
"Centamin is an obvious takeover target as its share price has been through a few weak patches in recent years due to operational issues. Its Sukari project in Egypt is one of the biggest gold deposits among any listed miner and is considered to be a prized asset.
"Centamin has been looking at opportunities beyond Egypt for numerous years but there has been no progress towards actually developing a second mine. Getting hitched to Endeavour would create a much bigger company with numerous projects and geographical diversity - something which investors would no doubt be hungry to back.
"The key sticking point is likely to be price. Centamin probably has the view that its recent sluggish share price isn’t indicative of the true value of the company when taking a long-term view. Endeavour may have to rummage deeper in its pockets to see if it can find a few more nuggets to sweeten the terms of the proposed deal."