Gold miner shines after rebuffing £1.5bn merger
BOSSES at Centamin have snubbed a £1.5bn merger bid from Canada’s Endeavour Mining, as the latest wave of deal-making in the gold industry reached London.
In its rebuttal, Centamin’s board said the terms of the offer undervalued the mid-cap miner and that Endeavour would benefit more from the tie-up.
Centamin’s investors would have owned 47.1pc of the new entity, while Endeavour’s would have 52.9pc. But analysts saw potential, with Peel Hunt saying the timing was right and there was a good combined business model on offer.
With just a single main project – the Sukari gold mine in Egypt – Centamin is seen as a bit of a onetrick pony. Despite being high-quality, Sukari is struggling with sluggish production.
Centamin is also exploring for gold in Ivory Coast and Burkina Faso – two of the three countries, incidentally, in which Endeavour has a presence. The third is Mali.
Endeavour must formally make an offer, or announce it is not making one, by the end of December.
Centamin rocketed 14.8pc, or 16.6p, to 128.8p, ahead of the 126p per share bid, suggesting the City is gearing up for a sweetened bid or hostile takeover.
Finncap analyst Martin Potts said the bid could have wider repercussions and pave the way for a cut-price overseas takeover of struggling Yorkshire fertiliser miner Sirius Minerals, which yesterday fell 1.3pc, or 0.04p, to 3.43p.
Fellow gold miners Fresnillo – up 2pc, or 11.2p, to 582.6p – and Polymetal – 1.8pc higher, or 21.5p, to 1192p – were the top Footsie risers as offhand remarks made by US President Donald Trump about not having a deadline for a trade deal with China sent markets tumbling worldwide, with investors taking refuge in the traditional safe haven of gold.
The FTSE 100 dropped 1.7pc by the close, down 127.18 points, to 7158.76, while the FTSE 250 fell 0.9pc, or 199.28 points, to 20,500.93.
Also reeling from Trump’s remarks was steelmaker Evraz, which fell 7.4pc, or 27.7p, to 345.4p, after he slapped tariffs on Brazil and Argentina’s steel industries on Monday. And Burberry trailed a fall in European luxury stocks, closing 1.8pc lower, or 35p, at 1970p, after Trump threatened 100pc tariffs on French goods such as champagne.
At plumbing and heating provider Ferguson, profits jumped 9pc to £347m between August and October, buoyed by growth in the US. It said plans to separate off its UK business, which is known as Wolseley, are on track. It fell 2.8pc, or 184p, to 6474p.
East European airline Wizz Air slid 0.6pc, or 22p, to 3927p, unmoved by a 24pc surge in passengers it carried in November compared with last year. Almost 3m people flew with Wizz, as it added 11 routes. Property company Newriver
REIT advanced 0.4pc, or 0.8p, to 189.2p, after it bought Bravo Inns, a pub group mainly based in the North West, for £17.9m.
Fashion firm Ted Baker rose 5.8pc, or 21.2p, to 387.2p, bouncing most of the way back from a plunge on Monday when it revealed a £25m balance sheet blunder.
The pound rose 0.5pc to $1.30 after a poll from Kantar showed that the Conservatives boosted their lead over the Labour Party during the past week. It estimated Tory support hit 44pc, while Labour’s was at 32pc.
This weighed on export-reliant stocks such as drinks giant Diageo, which fell 0.2pc, or 6.5p, to 3117.5p, and undid any gains from an upgrade from RBC analysts.
WH Smith also finished in the red – down 2.2pc, or 54p, at 2374p – even though Peel Hunt analysts heaped it with praise, saying the retailer was undervalued.