Endeavour Mining Corporation and Centamin have agreed to conduct a reciprocal due diligence exercise to assess the feasibility of a merger, following a weekend meeting between Endeavour’s CEO and Centamin’s chairman, Endeavour said on Monday.
“The objective of the due diligence exercise would be to allow both companies to further understand each other’s assets,” Endeavour said in a statement.
It would be “a critical precursor” to determining whether a deal could be reached that was in the best interests of both companies’ shareholders.
As part of a flurry of M+A activity in the gold sector, Endeavour Mining Corp made a $1.9 billion all-stock takeover proposal for Africa-focused Centamin this month.
The move comes a few weeks after Centamin told Ahram Online that it rejects the business tycoon Naguib Sawiris-backed takeover offer, arguing that Endeavour Mining Corporation, which is owned by Sawiris, is heavily in debt.
"Tracking its position in the market, we found that Endeavour's fiscal position is very bad, as it is $750 million in debt, while Centamin has a sound fiscal situation and it does not have to accept any such deal, especially since Sawiris has frequently announced this in recent years and Centamin's response has always been to refuse his offers," managing director and vice chairman of Centamin, PLC, the owner of El-Sokari Gold Mine in Egypt, Josef El- Raghy, told Ahram Online earlier in December.
El-Raghy said that the due diligence measures announced by Endeavour does not mean that Centamin has accepted the acquisition offer.
Speaking to Ahram Online, El-Raghy asserted that Centamin maintains its position that it refuses any offers from Endeavour, especially given the latter’s poor financial situation and the fact that it is a debt-distressed company.
"For Centamin, we welcome any offer for acquisition or partnership, but on the condition that the company that makes the offer be fiscally sound. We still refuse Endeavour’s offer and there is no room for negotiations in this regard," El-Raghy said.
© 2010 Ahram Online.