Resource News

Macarthur Coal snubs US miner Peabody’s $3.3bn bid

US coal giant Peabody Energy has made a surprise move to torpedo Macarthur Coal’s grand plans of becoming Australia’s top independent coal producer with a $3.3 billion takeover offer that met immediate resistance.

Shares in Macarthur soared 16 per cent, or $1.96, to $14.05 after Peabody, based in St Louis, Missouri and the largest private sector coal company in the world, made a non-binding $13-a-share offer for Brisbane-based Macarthur.

But Macarthur chairman Keith DeLacy swiftly dismissed Peabody’s approach as highly conditional and not fully valuing the company and its significant growth prospects.

The offer, which continues the rush for Australian resources assets by foreign companies, is conditional on Macarthur not proceeding with its offer to acquire Gloucester Coal and an associated share issue and asset deal involving Gloucester’s largest shareholder, the Noble Group.

Mr DeLacy said Macarthur believed there were numerous strategic and operational benefits in the proposed acquisitions of 100 per cent of Gloucester Coal and Noble Group’s interest in the Middlemount joint venture in Queensland. It remained committed to both deals.

Analysts said Peabody’s offer of $13 a share was too low to succeed, but could put the brakes on Macarthur’s bid for Gloucester Coal, if a higher or rival bid was made.

Andrew Harrington, an analyst at Patersons Securities, said there had been rumours that potential buyers were circling Macarthur but that the Peabody bid was a surprise. “It is possible another party could make a bid,” he said.

Peabody said the $13-a-share offer represented a 34 per cent premium to the price at which Macarthur shares would be issued to Noble Group under the Gloucester deal.

“It is also above the top end of the recent independent expert’s valuation, which included significant value attributable to Macarthur’s growth assets,” Peabody said.

The offer for Gloucester, which valued it at $668.81 million when it was launched in December, would if successful make Macarthur Australia’s largest independent coal producer.

Macarthur, which has a market capitalisation of $3.075bn, is the world’s biggest exporter of pulverised or PCI coal, used in the steelmaking process.

Any deal with Macarthur would need the support of its three major shareholders. Citic Australia Coal has 22.4 per cent of the miner, ArcelorMittal, the world’s biggest steelmaker, holds 16.6 per cent, while South Korea’s Posco has 8.3 per cent.

Peabody said that under its proposal the three largest shareholders would be offered the alternative of retaining their existing interest in Macarthur.

“The proposal contemplates a scheme of arrangement being put by Macarthur to its shareholders for approval, which would result in Macarthur being privatised and operated and controlled by Peabody,” the company said.

“Peabody has initiated discussions with Macarthur’s three largest shareholders and those discussions are continuing.”

Peabody operates eight mines in Queensland and NSW, and is seeking more to feed power stations and steel mills in China, the world’s largest user of coal.

Gloucester shares fell 9.9 per cent to $9 yesterday on investor concerns the Macarthur bid may not proceed…read more at The Australian