Increasing its previous bid of $6 a share, Noble has out-muscled the proposed scrip-based merger between Gloucester and Whitehaven Coal and effectively placed a $573 million valuation on Gloucester.
The battle for control of Gloucester has been a boon for the producer’s shareholders as the company soared from a close of $3.28 on February 19, the day before the initial Whitehaven merger announcement, to close at $6.94 yesterday.
But Patersons Securities coal analyst Andrew Harrington says he is not expecting any more merger and acquisition activity on the back of the recent tug of war for Gloucester, at least in the short term.
One of the main positives he has calculated from Noble’s offer comes from the value it implies on coal resources in Australia.
Harrington told ILN the Noble takeover offer was implying a price of about $4.50 of enterprise value per resource (measured and indicated resources total), with many other Australian coal companies below this level.
In his outlook for other coal producers, he said Centennial Coal was looking very cheap at under $2 a share.
The market clearly agreed, as Centennial shares rallied 10c to take the producer to $2.03 yesterday.
Harrington also views New Hope as undervalued – it has $US2.61 billion in term deposits, with the bulk coming from its $2.45 billion New Saraji exploration project sale to BHP Billiton Mitsubishi Alliance last year.
“New Hope is pretty much only getting appreciated for its cash, not for its operating assets,” he said.
While Felix Resources has been linked by the media to a takeover offer from Chinese giant Yanzhou Coal, Harrington remains positive on Felix and shed some light on the takeover speculation.
He said there were rumours earlier this year that Felix management declined a Yanzhou approach in the $A12-13 range and were looking at $15, with the Moolarben project edging closer to production and first coal to be loaded in March 2010.
Felix closed at $10.68 yesterday, picking up 9c amid the gains made on various coal companies after Noble’s offer hit the market.
Overall, Harrington said a lot of the coal stocks had appreciated quite strongly since the first quarterly reports came out in April and May.
He urged investors to be cautious at the moment and said while some companies had been massively undersold, others had more than recovered.