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Monday, 9 December 2019

Endeavour’s Centamin merger bid faces new setback as French officials launch corruption investigation into CEO

M&A WATCH- Endeavour’s bid to merge with Centamin faces hurdle as report suggests CEO De Montessus is target of corruption probe: Endeavour Mining’s USD 1.9 bn bid to acquire gold miner Centamin has run headlong into a report that the company has been the target of a corruption probe by French officials since 2018. British newspaper the Mail on Sunday reported yesterday that the French government has been investigating allegations that Sébastien de Montessus allegedly made fraudulent financial declarations while he was deputy CEO of state-owned French nuclear firm Areva and bribed a foreign public official. De Montessus denies all allegations. The story, broken by the Mail’s business section, has since been picked up by the Times of London.

Endeavour has previously disclosed the investigation, writing in its annual report that “De Montessus’s status in the French inquiry changed in March 2018 to ‘mis en examen’ or ‘under judicial inquiry’, adding: ‘This is an investigative stage of the inquiry and does not equate to being “charged” in the UK and North America.”’ Endeavour’s board “did not consider that the ongoing inquiry would impede De Montessus’s ability to carry out his responsibilities and effectively execute his duties as chief executive officer.”

There are also questions over Endeavour’s attempted merger with Centamin: Officials are also investigating why Endeavour denied Centamin access to company information necessary for it to conduct due diligence after the bid was announced. The London-listed operator of Egypt’s Sukari gold mine last week unanimously rejected Endeavour’s all-share merger proposal on the grounds that it would disproportionately benefit the Canadian firm’s shareholders. Under the plans, Endeavour would have acquired a 52.9% stake in the joint company, while Centamin would control the remaining 47.1%. We noted yesterday that Endeavour was “reaching out to Centamin shareholders” in the hope they would reconsider their rejection of the all-share merger proposal. Both companies declined to comment on the investigation.

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