Tuesday 14 January 2020 3:00 pm

Endeavour calls off merger talks with gold miner Centamin

Endeavour has called off attempts to merge with London-listed miner Centamin, after it said it would not extend the deadline for the Canadian corporation to make an offer.

Shares in the UK firm fell eight per cent after the announcement was made.

The two firms have been in talks since early December, when Endeavour went public with an £1.47bn all-share takeover.

After wrangling about due diligence deadlines for much of the rest of the month, Endeavour has now decided to bring an end to its pursuit, which it has been conducting since October 2018.

The Canadian mining giant’s chief executive, Sebastien de Montessus, said in a statement: “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.

“The quality of information received during the accelerated due diligence process has been insufficient to allow us to be confident that proceeding with a firm offer would have been in the best interests of Endeavour shareholders.”

Centamin issued a statement saying that Endeavour’s offer “materially undervalued” the firm and its prospects.

Jim Rutherford, the firm’s deputy chairman, said: “After a period of constructive engagement, Centamin and Endeavour have not reached agreement on value and have therefore terminated discussions.

“We are highly confident in our growth strategy, which includes but is not limited to value-accretive diversification.”

When the merger attempts were made public, analysts said that Centamin was an obvious takeover target. Russ Mould, investment director at AJ Bell, said that firm’s Sukari project in Egypt is one of the biggest gold deposits among any listed miner and is considered to be a “prized asset.”

In last week’s trading update, Centamin said that the fourth quarter saw a 50 per cent rise in production at the Sukari mine, making it one of the best quarter’s in Centamin’s history. The firm reaffirmed its guidance for 2020.

In its initial rejection of Endeavour’s offer, Centamin’s board said that the proposal would provide comparatively greater benefit to Endeavour’s shareholders.

It added it believed Centamin is better positioned to deliver shareholder returns than the combined entity.

The two companies then traded statements in which the UK firm claimed that Endeavour was stalling over releasing crucial due diligence information, with the Canadian firm responding that Centamin was acting in a way that suggested “it is unwilling to explore meaningfully the potential benefits of a merger.”