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Gold miner Centamin rockets after rebuff for Endeavour’s £1.5 billion offer

Mark Shapland
Anglo American

Shares in Centamin shot higher today after the gold miner was subject to an aggressive takeover bid from Canadian-listed Endeavour Mining.

Endeavour, whose biggest shareholder is Egyptian billionaire Naguib Sawiris, had the £1.47 billion offer immediately knocked back by Centamin management, who had refused to entertain any discussions.

As a result, Endeavour has decided to go straight to shareholders to drum up support. Centamin responded by urging shareholders to do nothing, pointing out that no firm offer had yet been made.

Michael Beckett, Endeavour’s 83-year-old chairman and one-time chair of Thomas Cook, said: “We have decided that it is necessary to make public our proposal so that the voices of shareholders are heard.”

The Canadian miner has offered 0.0846 Endeavour shares for each Centamin share, a 13% premium on Centamin’s closing price yesterday.

Yuen Low, analyst at Shore Capital, said Centamin had been struggling for some time and left itself exposed to a possible takeover. Centamin’s Sukari gold mine in Egypt has been plagued by production problems. It has served up low-grade ore that is hard to sell on the market. At the beginning of October, boss Andrew Pardey announced his departure after he failed to turn the production problems around. Shore’s Low thinks the deal would be supported by shareholders but added that they would likely hold out for a higher price.

He said: “Endeavour has only made an offer because Centamin has underperformed in recent years and management has failed to turn the company around. My guess is they’ll back it but want a better price.”

The gold sector has been consolidating this year. Yesterday China’s state-backed Zijin Mining agreed a $1 billion acquisition of Continental Gold, a Colombia-focused gold company. A week before that Kirkland Lake Gold launched an offer for rival Canadian miner Detour Gold.

Sawiris, who made his fortune building a telecoms empire extending from Algeria to Pakistan, has a 29.8% stake in Endeavour. He has been also been a driving force in trying to consolidate the sector. In 2017 Endeavour approached Acacia Mining but talks fell through after Tanzania unexpectedly banned exports of gold. Acacia was bought by Barrick Gold in July. Centamin shares rose 8.6p to 120p.