Under the conditional proposal, Yanzhou would acquire the 22% of shares in Yancoal that it did not own via a share exchange. Yancoal shareholders would receive 0.91 Yanzhou CHESS Depositary Interests for every Yancoal ordinary share held.
“The Yancoal IBC [independent board committee] is undertaking appropriate due diligence investigations to enable it to assess the proposed terms of the proposal and will engage in discussions with Yanzhou before making a recommendation to shareholders,” Yancoal said in a statement.
“The IBC has retained investment bankers Blackstone Advisory Partners and Lazard and lawyers Minter Ellison to assist in that process.”
Yancoal listed on the ASX through the takeover of Gloucester Resources and has a portfolio of coal mining assets in New South Wales and Queensland that includes the giant Moolarben and Austar mines.
As part of its Foreign Investment Review Board approval for the $3.5 billion acquisition of Felix, Yancoal had to list on the ASX.
The listed Yancoal is the outcome of the merger of the assets of Gloucester Coal and specific assets of the previously unlisted portfolio of Yancoal Australia Limited. Yancoal is now one of the largest pure-play coal companies in Australia.
Yanzhou is the only Chinese coal mining company that is listed on the Shanghai, Hong Kong and New York stock exchanges.
Yanzhou would apply for a foreign exempt listing of those CDIs on the ASX and it is proposed that holders of the CDIs can transmutate those securities into their underlying share, the company said.
Yanzhou independently developed longwall top coal caving, an international leading technology that can be utilised in the excavation of thick coal seams.
The technology has been registered for patent in China, Australia and South Africa. Yancoal has been implementing this technology in a number of its mines.