Egyptian gold mine owner snubs $1.9bn Endeavour bid

The Sukari gold mine, 700 kilometers from Egypt’s capital, Cairo. (Supplied)
Updated 03 December 2019

Egyptian gold mine owner snubs $1.9bn Endeavour bid

  • The Sukari mine is Egypt’s first large-scale modern gold mine

LONDON: British gold miner Centamin has rejected a £1.47 billion ($1.89 billion) all-stock takeover proposal from Canada’s Endeavour Mining Corp, saying it did not offer enough value to Centamin shareholders.

Toronto-listed Endeavour announced its plan earlier in the day, seeking to gain control of Centamin’s only operating mine, the Sukari project in Egypt. The Canadian firm said Centamin had rebuffed attempts to hold talks.

Endeavour said it planned to offer 0.0846 of its own shares for each Centamin share, equivalent to about 126.27 pence per share — a 13 percent premium to Centamin’s last closing price.

“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,” Centamin said.

Miners across the globe are looking to boost operations through deals after years of subdued spending, with Barrick Gold buying out Africa-focused Randgold and US-listed Newmont taking over Goldcorp.

Centamin describes its Sukari mine as Egypt’s first large-scale modern gold mine, despite falls in production since 2017.

“Getting hitched to Endeavour would create a much bigger company with numerous projects and geographical diversity — something which investors would no doubt back,” AJ Bell investment director, Russ Mould, said.

Endeavour, which operates four mines across West Africa, said Sukari would benefit from being part of a larger company and from the fact that La Mancha — a private gold mining group chaired by Egyptian billionaire Naguib Sawiris — would become a key investor. The Sawiris family is Endeavour’s top shareholder.

Endeavour first showed interest in Centamin in 2018. It then sent a formal proposal last month.

The Canadian miner said on Tuesday Centamin’s board had refused talks without a standstill agreement, which could restrict Endeavour’s options.

“Endeavour is therefore today announcing the terms of its proposal in order to allow Centamin shareholders the opportunity to consider the proposal and encourage the Centamin board to engage with Endeavour on the prospects for a friendly recommended merger,” the company said.

If Endeavour succeeds, its shareholders would own 52.9 percent of the entity, while the rest would be held by Centamin shareholders.

$8bn blow to Erdogan as investors flee Turkey

Updated 57 min 37 sec ago

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.