AngloGold Ashanti has announced its agreement to take over its smaller competitor, Centamin, in a strategic transaction valued at $2.5 billion. This acquisition is particularly noteworthy, as it involves Centamin, which operates Egypt's largest and first modern gold mine. The news was made public through a filing on Tuesday, leading to a dramatic shift in market activities.
Following the announcement, shares of Centamin skyrocketed by 25% during late Tuesday morning trading in London. Conversely, AngloGold Ashanti's shares experienced a decline of 5% around midday in Johannesburg. The acquisition will be executed in a cash-and-stock arrangement. Specifically, Centamin shareholders will receive 0.06983 newly issued shares of AngloGold Ashanti and $0.125 in cash for each of their shares.
This offer translates to a significant premium of 36.7% based on Centamin's closing price from the preceding Monday. Additionally, eligible Centamin shareholders will continue to benefit from an interim dividend of $0.0225 per share, which is set to be paid on September 27. The execution of this transaction hinges on a court-sanctioned scheme of arrangement, anticipated to occur in the fourth quarter, contingent on approvals from shareholders and regulatory bodies.
Upon completion of the deal, it is projected that AngloGold Ashanti shareholders will command 83.6% of the newly formed entity, while Centamin shareholders will maintain a 16.4% ownership stake. Centamin's Sukari gold mine has achieved remarkable production figures, having yielded over 5.9 million ounces of gold since its commencement in 2009.
Jochen Tilk, Chair of AngloGold Ashanti, described the acquisition as 'highly compelling,' highlighting the enormous geological potential it brings, along with an anticipated annual boost in gold production by 450,000 ounces. The South African buyer has also initiated dialogues with the Egyptian government to reaffirm its commitment to the region.
Following the acquisition, AngloGold Ashanti expects an acceleration in free cash flow per share in the first complete year post-closing, alongside an increase in its net asset value per share. Meanwhile, Centamin's board is poised to support the offer to its shareholders, with Chair James Rutherford expressing confidence in AngloGold Ashanti's commitments and their positive impact on operations, local communities, and the dedicated workforce.
In anticipation of the takeover, Centamin has released a trading update for the initial two months of the third quarter, reaffirming its 2024 gold production guidance between 470,000 ounces and 500,000 ounces per annum, following the production of 93,278 ounces and sales of 102,563 ounces from the Sukari mine in the two months concluded on August 31..