Wednesday, August 21

Miner Macarthur to talk takeover with Peabody


SYDNEY: Australian coal miner Macarthur said yesterday it was considering a US$3.8 billion takeover offer from US energy group Peabody, in a move which could end a fast-moving bidding war.Macarthur said it was not recommending the bid but in a crucial sign postponed a shareholder meeting scheduled for Monday that was designed to seek approval for its takeover of fellow Australian miner Gloucester Coal Ltd.

“The board of Macarthur has considered Peabody’s further proposal and intends to enter discussions with Peabody,” the company said in a statement.

Macarthur has been at the centre of a takeover tussle in recent weeks, with miner Peabody and Australian miner New Hope entering the fray and reports that Swiss mining giant Xstrata was interested in the metallurgical coal miner.

Macarthur is the world’s top producer of a type of coal used to make steel, a building block for the mass industrialisation projects under way in Asian countries such as China.

Macarthur shares soared Friday, closing up 8.25 per cent at A$16.54 following the A$4.1 billion offer from Peabody, the US company’s third bid after offers of A$3.3 and 3.56 billion were rejected.

The Peabody bid values shares at A$16.00 — topping its earlier offer of A$14.00 while the New Hope Corp offer is for either its own shares or a cash alternative of A$14.50 per share capped at A$950 million.

Macarthur said it would start talks with Peabody after two of the Australian company’s major shareholders — steelmaking giants POSCO and ArcelorMittal, which together own about 25 percent — expressed an interest in the bid.

“POSCO confirms its in-principle support for a Peabody-led privatisation of Macarthur in the absence of a superior proposal,” Macarthur quoted POSCO as saying.

“POSCO presently intends to retain its existing economic interest in the resultant private company structure.” Macarthur said ArcelorMittal also felt the Peabody offer warranted “due consideration.” The company’s largest shareholder CITIC, which holds a 22.4-per cent stake, had not yet responded, it said.

Macarthur, which has rejected all previous offers, made no recommendation in relation to Peabody’s latest bid, which is contingent on Macarthur not going ahead with the Gloucester takeover, a deal that also involves Noble Group.

Peabody said it was pleased that Macarthur “has decided to engage with us” and with the response from ArcelorMittal and POSCO to the proposal.

“We continue to believe that a combination of the two companies would offer a strong complementary fit, creating a substantial Australian operating platform with excellent capabilities and resources,” it said in a statement.

“Both companies have an organic growth pipeline that is set to double metallurgical coal volumes within the next five years to serve high-growth Asian markets.”

Under the proposal, Peabody is prepared to offer cash to all Macarthur shareholders and to provide Macarthur’s three major shareholders with the opportunity to retain their economic interest in the miner if they so wish.— AFP