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Tuesday, 17 November 2020

Endeavour to acquire Teranga Gold for USD 1.86 bn in 2021

M&A WATCHSawiris-backed Endeavour Mining will acquire Teranga Gold in a USD 1.86 bn share swap expected to close in 1Q2021, creating one of West Africa’s largest 10 gold producers with an annual output of 1.5 mn ounces, according to a company statement. Major shareholders in both companies — Barrick Gold and Tablo Corporation for Teranga, and La Mancha in the case of Endeavour — have signed voting support agreements approving the transaction. “The combined entity will become a new senior gold producer and enjoy an improved capital markets profile, underpinned by a healthy balance sheet and strong cash flow capabilities to support a sustainable dividend,” said CEO Sebastian de Montessus in a statement Monday. The acquisition adds mines in Burkina Faso and Senegal to Endeavour’s portfolio, and makes the new mining company the largest gold producer in both countries as well as Côte d’Ivoire.

Who gets what? Endeavour is offering its shares at a ratio of 0.47x per Teranga share, with Endeavor holding a 66% stake and Teranga holding 34% of the new entity. The companies had announced last week that they were in discussions over a “merger of equals style” transaction.

Sawiris-run La Mancha will invest USD 200 mn in the new company in a move to boost liquidity and strengthen the new entity’s balance sheet. La Mancha’s stake in Endeavour will be reduced accordingly from 24.1% to 19% following the merger, to allow for a larger freefloat of Endeavour’s shares.

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