Lexpert Magazine

LEXPERT MAGAZINE | JUNE 2016 17 tunity and more risk appetite. You have to also bear in mind that developing a mine is one set of skills; operating it is quite an- other. We do both of those well. LEXPERT: ere was also the matter of La Mancha, Endeavour's largest shareholder. e company exercised its anti-dilution clause, investing a further $85 million in Endeavour in order to maintain its 30-per- cent stake. How common are these, and did it present any issue in this deal? Carroll: When we acquired the Ity mine from La Mancha last fall, the company ne- gotiated a pre-emptive right entitling it to maintain a 30-per-cent interest in Endeav- our. We see La Mancha's decision to invest a further $85 million in Endeavour and maintain its 30-per-cent shareholding as a strong vote of confidence in Endeavour's future. [La Mancha Chair] Naguib Sawiris has a common vision with Endeavour to build a leading African gold producer. LEXPERT: When the deal was announced, in early March, Endeavour's shares fell. is devaluation affected both companies, since True Gold's offer was based on En- deavour's share price. Did the market re- action give either side pause for thought? Was there an effort to sweeten the deal? Anderson e standard market reaction to the announcement of an acquisition pro- posed to be completed with shares is for the buyer's shares to fall slightly in value and the target company's shares to increase to the implied transaction value, less an appropriate deal-completion risk discount. In this case, there was no untoward or un- expected change in the market prices of the shares. ere was no pause or thought to change the deal terms and, as it turned out, everyone participated in the 35-per- cent increase in Endeavour's share price from the time of announcement to the time of completion. LEXPERT: Shareholders could have voted against it. You needed two-thirds support, and you got way more than that, right? Carroll: Yes, the approval levels achieved were far in excess of the 67-per-cent mini- mum: over 99 per cent on the Endeavour side and over 95 per cent on the True Gold side. We see this as a strong endorsement of Endeavour's continuing strategy to grow in West Africa. Investor confidence has really returned in gold since the beginning of this year. You can see that in gold and equity prices, and in market flows. If you believe in a higher gold price over time, it makes sense to add good quality assets or pro- duction when prices are closer to the lows. We've also been growing during a period of time when others have been hesitant, so we hope the equity market will reward that. LEXPERT: e BC Supreme Court had to approve the deal, as well as the TSX. Were there any other regulatory approvals required? From the Burkina Faso govern- ment? Or even community groups? Carroll: Fortunately, completion of this transaction did not require any unusual regulatory or governmental approvals, and any that were required were obtained in the ordinary course. LEXPERT: ere are so many rich details around this transaction. What would you say was most memorable? Carroll: We announced this transaction hot on the heels of closing the La Mancha deal, which I don't think the market expected. One of the benefits was that the significant anti-dilution cash injection by La Mancha further bolstered our balance sheet, and gave us an important shot in the arm for showing we could fund our Houndé mine at anticipated gold prices without further debt financing. Investors and commenta- tors understood the rationale and value of a nice new low-cost asset that helps to build an even larger new low-cost asset. (For a summary and full list of legal advisors, see page 26 in "Big Deals.") ON THE TREND M&A Cross-Pollination A 10-year analysis of Canadian M&A deals (over US$50 million) shows which sectors are most likely to "cross-pollinate" by acquiring assets and entities in other sectors. Finance players seemingly participate across the gamut, while energy and real estate entities most often merge homogenously. Dealmakers in the high-tech, media and telecom industries also intermingle. GRAPHIC BY DAVID DIAS; SOURCE: THOMSON REUTERS ON THE DEAL

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