Endeavour Mining drops takeover bid for Centamin due to lack of information

LONDON (Reuters) - Endeavour Mining EDV.TO abandoned its 1.5 billion pound ($1.9 billion) pursuit of gold miner Centamin CEY.L on Tuesday, citing a lack of information on its target while Centamin maintained the proposal was too low.

Emboldened by rising commodity prices, the gold industry has seen a flurry of deals since the end of 2018 as companies attempt to squeeze value from operations after years of subdued activity and low returns.

London-listed Centamin, which operates one mine in Egypt, rebuffed Endeavour’s all-stock takeover proposal in December, saying it did not offer enough value to Centamin shareholders.

Since then, Britain’s takeover panel allowed Endeavour, which owns four West African mines, more time to make a firm offer following an extended due diligence process when information would be shared.

The combined entity would have produced 1.2 million ounces of gold in 2019 at an all-in sustainable cost - a key industry benchmark - of $875 per ounce, which would make it one of the world’s largest and lowest-cost miners.

But during the due diligence process to assess the deal, Endeavour’s chief executive said the quality of information received was insufficient to be confident that a firm offer would be in the best interests of Endeavour’s shareholders.

Centamin’s shares fell more than 5% after the announcement but are up about 10% since Endeavour’s takeover proposal on Dec. 3. Endeavour’s shares are down by about 12% in Toronto.

“It came down to a handful of key issues that drove consideration on value... there was a difference in methodology and where the growth opportunities existed,” Centamin interim CEO Ross Jerrard told Reuters.

He said Endeavour’s assertion that Centamin did not share information was “simply not true”, adding he did not see merit in requesting another extension as the two sides were far apart.

Centamin on Tuesday declared a final dividend of 6 U.S. cents following a good performance in its last quarter, taking last year’s total payout to 10 cents, an 82% increase on 2018.

“There is a logic to combining the companies but that’s got to be done at a price acceptable to management, board and investors,” said Peel Hunt analyst Peter Mallin-Jones.

Centamin has struggled shifting the Sukari mine, Egypt’s only operating gold mine, from open pit to underground. Centamin, which also has exploration projects in West Africa and the Cleopatra project in Egypt, is still on the hunt for a chief executive following the retirement of Andrew Pardey late last year after four years in the role.

Reporting by Zandi Shabalala; Editing by Susan Fenton