Macarthur major shareholder CITIC’s decision to accept the $16 per share offer last week meant that the joint bidding vehicle PEAMCoal would need to outlay more funds to complete the takeover.
"ArcelorMittal has determined that it would no longer be appropriate to allocate substantial capital to the acquisition of a non-controlling, minority business interest," it said in a statement.
"Given the unanticipated level of acceptances into the offer, ArcelorMittal believes that it is more appropriate to focus its capital elsewhere in its business.”
The outlay increased in August this year when PEAMCoal agreed to up the offer by 50c to $16/share and by 25c if it receives 90% acceptances by November 11.
Peabody chief executive Gregory Boyce played down the effect of ArcelorMittal’s pullout on its takeover of Macarthur.
"While we anticipated a positive joint venture with ArcelorMittal, we have always preferred a larger ownership,” he said.
“We partnered with ArcelorMittal to increase the likelihood of achieving control of Macarthur, which has now occurred. ArcelorMittal's decision accelerates our ability to realise synergies, integrate the operations and benefit from results."
Peabody will fund the acquisition with cash and debt, including a new senior unsecured term loan of up to $US1 billion. It says it has good access to the bank and debt markets.
Earlier this week PEAMCoal said it had a relevant interest in approximately 59.85% of Macarthur, which surpasses the minimum accepted condition of 50.01%, meaning the offer is unconditional.
