Golden giant expands its footprint in Africa! AngloGold (AU.US) invests $2.5 billion to acquire Centamin.

On Tuesday local time, AngloGold Ashanti Ltd. (AU.US) announced that it will acquire its smaller competitor, Centamin, in a stock and cash deal worth $2.5 billion, with the aim of expanding its business footprint in Africa. Under the terms of the deal, Centamin shareholders will receive 0.06983 shares of new AngloGold stock and $0.125 in cash for each share of Centamin they hold. In its statement on Tuesday, AngloGold pointed out that the cash and stock offer represented a 37% premium to Centamin's closing price on September 9th. Following this news, AngloGold's stock price dropped by 9.8% in Johannesburg, marking the largest intraday drop in three years, while Centamin's stock price rose by 24% in London to 148.10 pence, reaching its highest level since October 2020. After the completion of the transaction, it is expected that AngloGold shareholders will hold approximately 83.6% of the enlarged issued share capital, with Centamin shareholders holding about 16.4%. AngloGold Ashanti stated that it expects the transaction to increase free cash flow per share in the first full year following completion. AngloGold Ashanti Chairman Jochen Tilk praised the deal as "highly attractive," emphasizing that the acquisition provides "huge geological potential" for the company, which has the capability to develop it fully. The Centamin board also expressed its unanimous recommendation for shareholders to support the transaction. AngloGold Ashanti, which originated from the mining empire created by Ernest Oppenheimer, has since moved its headquarters to London and its primary listing venue to New York. In 2020, AngloGold sold its last mine in South Africa, marking its further exit from the South African market. Currently, AngloGold's assets span from Australia to the Democratic Republic of Congo, and the addition of Centamin's key asset, the Sukari gold mine, is expected to increase their gold production by around 450,000 ounces, with annual production exceeding 3 million ounces. The Sukari gold mine is Egypt's largest and one of the largest producing mines in the world. Despite being long considered one of the best gold mines globally, it has not been owned by a top-tier producer. However, since the uprising that led to the ousting of former President Mubarak, the Sukari mine has faced operational and political challenges. It is worth noting that this acquisition is part of a series of recent transactions in the gold mining sector, including the world's largest gold producer Newmont Mining's acquisition of Australian Newcrest Mining for $16.8 billion by the end of 2023. The Centamin deal is the latest sign of large gold producers seeking to acquire smaller competitors as gold prices approach historic highs. Last month, Gold Fields Limited Sponsored ADR (GFI.US) agreed to acquire Canada's Osisko Mining Inc. for $1.6 billion. In May, mining company BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs (BHP.US) abandoned its plan to acquire competitor Anglo American for $49 billion, after the London-listed company rejected its final request for more time, ending the six-week pursuit.