Endeavour Mining is convinced of the strategic rationale of combining both companies to create a diversified gold producer with a high-quality portfolio of assets.
It continues to believe that the proposed merger represents a significant value creation opportunity for both sets of shareholders.
On December 14, 2019, the CEO of Endeavour Mining and the Chairman of Centamin met in Perth, Australia, to discuss the merits of the proposed transaction and proposed next steps.
Ahead of this meeting, on December 10, 2019, both companies entered into a mutual non-disclosure agreement, which did not include a standstill undertaking.
During the December 14, 2019, meeting, it was agreed that in order to determine the feasibility of a transaction the parties would need to conduct a reciprocal due diligence exercise.
The objective of the due diligence exercise would be to allow both companies to further understand each other’s assets and would be a critical precursor to allowing the parties to determine whether the financial terms of a transaction could be agreed that was in the best interests of both companies’ shareholders.
In order to commence the due diligence exercise, the parties now need to agree on the scope and timetable. As such, Endeavour Mining has sent its proposed due diligence timetable to Centamin.
As previously announced, Endeavour is subject to a “put up or shut up” (“PUSU”) deadline, under which, in accordance with Rule 2.6(a) of the UK City Code on Takeovers and Mergers, Endeavour is required, by no later than 5:00pm on December 31, 2019, to announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or to announce it does not intend to make an offer in accordance with Rule 2.8 of the Code.
In the time between December 3, 2019 and this preliminary engagement, a significant portion of the PUSU period has elapsed, leaving little time before the expiry of the PUSU period on December 31, 2019 given scope and timetable are still being agreed.
In order to allow enough time for both parties to conduct proper due diligence and subsequently discuss terms, Endeavour has asked Centamin to request that the Takeover Panel consent to an extension of the PUSU period.
Centamin has however not yet done this and there can be no certainty that they will.
In line with Endeavour’s disciplined approach to business development opportunities and in light of the need for Endeavour to conduct due diligence on Centamin, Endeavour will not announce a firm intention to make an offer on or before December 31, 2019 without the recommendation of the Board of Centamin and Endeavour will not be able to waive this precondition.
As Endeavour Mining announced on December 3, 2019, the making of a firm offer by Endeavour is conditional upon the satisfaction or waiver by Endeavour of the following pre-conditions:
• satisfactory completion of due diligence on Centamin;
• each member of the Centamin Board giving irrevocable undertakings to vote in favour of the transaction in respect of all their Centamin shares.
Endeavour has confirmed to Centamin that it is prepared, subject to agreement on mutual due diligence scope, to execute a standstill undertaking that would preclude Endeavour from announcing a firm intention to make an offer to the shareholders of Centamin, unless the offer is recommended by the Centamin Board at the time of announcement.
Endeavour will, however, retain the flexibility to engage with shareholders at any time on the progress and outcome of those discussions to ensure shareholders are able to voice their opinion.
There can be no certainty that a transaction will occur.