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Canada-listed Endeavour Mining Corp. has dropped its pursuit of Centamin PLC after the two gold miners failed to reach agreement on terms of a takeover deal after a hurried due diligence process.

In early December, London-based Endeavour tabled an informal all-stock proposal for Centamin worth $2.5-billion.

Endeavour operates four mines in West Africa. Jersey-based Centamin operates a single mine in Egypt.

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Endeavour argued that Centamin would benefit from being part of a larger and better diversified miner, and that the combined company would be more appealing to investors. Centamin agreed that a combination could make sense and the two miners undertook a roughly six-week due diligence on each other.

In a statement explaining why Endeavour was walking away, chief executive officer Sébastien de Montessus said that while the rationale for a deal still made sense, the quality of information received during the due diligence was “insufficient to allow us to be confident that proceeding with a firm offer" was in the company’s best interests.

But in an interview, Centamin CEO Ross Jerrard disputed that reasoning. He said the quality of the information that the company provided to Endeavour over the six weeks was perfectly adequate and appropriate given the progression of the talks. Centamin’s management engaged in more than 100 meetings and conference calls with Endeavour, and provided around 1,700 confidential files, he said.

According to Mr. Jerrard, the main reason the deal didn’t get over the finish line is the two miners didn’t see eye to eye on valuation.

In a statement, Centamin said Endeavour’s offer “materially undervalued” the company, and that there wasn’t any point in continuing discussions.

As often happens when takeover deals fall apart, shares in the target company fell, while shares in the would-be acquirer rose, as arbitrage investors unwound their positions.

(Upon the announcement of a takeover deal, arbitrage investors typically go long on the shares of the target company, and short sell the stock of an acquirer.)

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On Tuesday, Centamin lost 7 per cent of its value in trading on the London Stock Exchange, as hopes of a premium stock takeover vanished.

Alan Spence, analyst with Jefferies, wrote in a note to clients that while the collapse of the takeover talks was a “near-term negative” for Centamin, the company would likely be on the radar screen as a potential takeover candidate for other miners, and perhaps even Endeavour again, at a later stage.

Endeavour shares rose by 5.4 per cent on the Toronto Stock Exchange.

The company’s decision to walk was greeted with approval by at least one analyst.

James Bell, analyst with RBC Dominion Securities, wrote in a note that the acquisition would likely have been dilutive to Endeavour shareholders. “Management are correct to walk away,” he wrote.

This was the second large potential merger in the past few years that has fallen apart for Endeavour. In 2017, the company engaged in takeover talks with African miner Acacia Mining PLC. But Endeavour abandoned its efforts after the Tanzanian government levied a sizable fine on Acacia, following a dispute over alleged unpaid taxes.

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Last year, Barrick Gold Corp. acquired the minority stake in Acacia it didn’t already own, after reaching an agreement with the government of Tanzania to settle the tax dispute.

After being dormant for the better part of a decade, deal-making has come roaring back over the past 16 months in the gold industry, as miners fight to win back interest from investors and bid to replace declining reserves. Last year, Barrick completed its US$6-billion takeover of Randgold Resources Ltd., and Newmont Corp. bought Canada’s Goldcorp Inc. for US$10-billion.

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