Endeavour’s $690 million Merger with Semafo

By Marcus Falck and Edvard Bruu (Stockholm School of Economics), Christopher Gvenetadze and Alessandro Carleo (Bocconi University) | 12/04/2020


Overview of the Deal

  • Acquirer: Endeavour Mining Corporation

  • Target: SEMAFO Inc.

  • Estimated value: CAD 1.10bn (ca. USD 690m)

  • Announcement date: 23rd March 2020

  • Acquirer Advisors: BMO Capital Markets, Gleacher Shacklock

  • Target Advisors: Maxit Capital LP, National Bank Financial Inc.

Endeavour Mining Corp announced the acquisition of SEMAFO Inc for CAD 1,102.71M (ca. USD 690m). The transaction was announced on March 23, 2020 and is expected to be completed by June 30, 2020.

For the past several years, Endeavour and SEMAFO have worked as industry partners to consider shared issues common to companies operating in West Africa. In early 2019, both companies engaged in a mutual dialogue in order to evaluate the merits of a business combination. The dialogue included extensive mutual due diligence as well as discussion of potential terms of a transaction, with a final proposal in May 2019. At that time, it was not possible to agree on terms that appropriately shared the risks and rewards of a combination.

In early 2020, discussions between Endeavour and SEMAFO recommenced. Endeavour’s management team completed on-site due diligence at SEMAFO’s operations in Burkina Faso during February 2020, including a comprehensive assessment of security, operations and exploration. Both companies also re-opened data rooms for mutual confirmatory due diligence, including visits and, following collaborative discussions, confirmed their shared strategic vision and desire to complete a combination subject to negotiation of agreeable terms. Negotiations proceeded, culminating in agreement on the terms of the Transaction detailed in this announcement. The deal rationale includes, among other things, the creation of a top 15 global gold producer with +1 million ounces of gold production per year and the creation of a leading West African gold producer with six operations and an attractive growth pipeline.

In terms of deal structuring, the agreement will lead to an exchanging ratio of 0.1422x representing a 27.2% premium to the 20-day VWAP for SEMAFO and is accretive on all metrics to Endeavour. Therefore, Semafo shareholders will receive 0.1422 of an Endeavour share for each Semafo share they hold. Existing Endeavour and Semafo shareholders will own approximately 70% and 30%, respectively, of the combined company.

“This transaction has received strong support from our key shareholders who recognize it as an exciting value creating opportunity to bring together two companies with common values and share culture built on decades of successful West African experience” - SEMAFO president and CEO Benoit Desormeaux

Company Details (Acquirer: Endeavour Mining Corp.)

Endeavour Mining Corporation is a gold mining company. The Company engages in gold mine production, development and exploration activities in West Africa. The firm operates mining projects located in Mali, Burkina Faso, and Cote d'Ivoire.

  • Founded in: 1988

  • Headquarters: George Town, Cayman Islands

  • CEO: Sébastien De Montessus

  • No. of employees: ca. 1000

  • Market cap: USD 1.68bn

  • EV: USD 2.32bn

  • LTM Revenue: USD 886.40m

  • LTM EBITDA: USD 223.80m

  • LTM EV/Revenue: 2.62x

  • LTM EV/EBITDA: 10.36x

Company Details (Target: SEMAFO Inc.)