- Anglogold makes 163p bid offer for Centamin
- 36.7% premium to prior closing price o
- Centamin shares up 72% over the past year
Shares in Centamin (CEY) jumped 24% to 149p after the Egyptian gold producer agreed terms on a cash and shares offer from global gold miner AngloGold Ashanti (ANG:JSE) pitched at 163p, representing a 36.7% premium on the prior closing price.
AngloGold’s cash and shares offer values Centamin at approximately £1.9 billion ($2.5 billion).
Centamin shareholders will be entitled to receive the interim dividend of $0.0225 per Centamin share in respect of the six-month period ending 30 June 2024, scheduled to be paid on 27 September 2024, the company said in a statement.
It is expected that AngloGold Ashanti shareholders will own approximately 83.6%, and Centamin shareholders will own approximately 16.4% of AngloGold Ashanti's enlarged issued share capital, with Centamin shareholders benefiting from up-front cash returns, following completion.
POSITIVE THIRD QUARTER TRADING UPDATE
Separately the Egyptian gold producer issued a positive trading update for the two months ending 31 August benefiting from the robust gold price which generated $76 million of free cash flow.
Gold production came in at 93,278 ounces and gold sales of 102,563 ounces from the Sukari gold mine - Centamin's flagship tier one asset.
The Sukari gold mine – Egypt’s largest and first modern gold mine has produced over 5.9 million ounces of gold since 2009.
Centamin's full results will be released in October in line with their normal reporting cycle.
PREMIUM TO FAIR VALUE LOW
Tim Huff and Alex Bedwany, analysts at Canaccord Genuity said: ‘While the premium to last night's close looks solid, we think the premium to fair value is actually low. This is very good timing on the part of AngloGold.
‘The bid comes after a 10% pullback in the share price, just ahead of Centamin finishing its four to five year capex stripping program and just ahead of Centamin reporting strong third quarter 2024 results.
‘The Centamin board has agreed to the terms and intends to unanimously recommend the terms. Upon completion of the merger Centamin shareholders will own 16% of the combined entity, with the allowance to keep the interim Centamin dividend already declared.
The transaction will be a scheme of arrangement, with a Centamin EGM (extraordinary general meeting) in late October (around the 28) and the completion date for the transaction in the fourth quarter of 2024.’
Russ Mould, investment director at AJ Bell said: ‘AngloGold’s takeover offer for Centamin has come at an interesting time for the gold mining sector. Shares in many operators have lagged the rising gold price because cost inflation has compressed profit margins.
‘These inflationary pressures are now starting to ease, which implies that margins will start to go up, and investors might be willing to pay a higher multiple of earnings to own the shares.
‘Therefore, gold miners feeling more confident about the future might be more willing to make acquisitions, meaning that Centamin’s takeover may not be the only one we see in the sector over the next six months or so.’
LEARN MORE ABOUT CENTAMIN
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
