4th Dec 2019 08:34
(Alliance News) - The board of gold miner Centamin PLC said Wednesday it unanimously rejects the "unsolicited" offer from Canadian miner Endeavour Mining Corp.
Centamin said the offer "materially undervalues" the company and it is "better positioned" to deliver shareholder returns on its own rather than teaming up with Endeavour.
Centamin became the latest London-listed gold miner to be an M&A target following a hostile GBP1.47 billion all-share combination proposal by Endeavour on Tuesday.
However, Centamin said the proposal is "skewed in favour" of Endeavour, and "fundamentally undervalues" Centamin, which operates the Sukari gold mine in Egypt.
The company added: "Centamin regularly considers potential strategic opportunities and does so through the correct communication channels and with non-disclosure agreements in place in order to best protect shareholders' interests. Centamin has communicated to Endeavour several times its willingness to engage on this basis and Endeavour has repeatedly refused to engage in a proper manner and allow the sharing of non-public information in order to better assess the value to shareholders of the potential combination."
As a result, Centamin believes, based on available public information, the offer is not worth it, saying Endeavour has been unable to "demonstrate that the logic of the proposal outweighs the risks to Centamin's established policy of distributing significant cash returns to shareholders".
Centamin shareholders, under the current proposal, would end up with 47% of the enlarged company, but it said it would've contributed 100% of the free cash flow in the first half of 2019 and it would've also contributed all of the free cash flow in 2018.
Centamin also noted its would've contributed 100% of this year's first half dividend and all of 2018's total dividend.
The London-listed miner said 57% of the measured and indicated resources of the enlarged company would come from Centamin and 69% of the inferred resources.
Centamin also noted it has liquid assets of USD289 million, and no debt, as of September 30, whereas Endeavour has gross debt of USD729 million, with net debt of USD599 million.
Centamin Chair Josef El-Raghy said: "The board strongly believes that Endeavour's proposal significantly increases financial and operating risk without any material benefits to our shareholders. Centamin's stated strategy has always been to maximise returns for all of its shareholders, having returned approximately USD500 million to shareholders since 2014. In addition, despite numerous requests, Endeavour has refused to enter into a customary non-disclosure agreement to allow the board to further assess the proposal.
"It is the board's belief that the proposal made by Endeavour sits in stark contrast with Centamin's strategy and we strongly advise our shareholders to take no action."
Shares in Centamin were flat in London on Wednesday morning at 128.82 pence each.
By Paul McGowan; [email protected]
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