Anglo not interested in Macarthur: reports

ANGLO American has reportedly decided against a counter bid for Macarthur Coal, paving the way for Peabody Energy and ArcelorMittal to proceed with their revised $4.9 billion offer for the Queensland pulverised coal injection producer.
Anglo not interested in Macarthur: reports Anglo not interested in Macarthur: reports Anglo not interested in Macarthur: reports Anglo not interested in Macarthur: reports Anglo not interested in Macarthur: reports

Coal trucks at Coppabella. Image courtesy of Macarthur Coal

Lou Caruana

Macarthur chairman Keith DeLacy said in the company’s target statement on Monday it was still possible another superior offer could be made.

But analysts consider it unlikely, given that Macarthur closed its data room to potential suitors last week and Anglo American has a track record of not following up on offers after conducting due diligence.

Anglo American was considered the most logical suitor for Macarthur with its Queensland metallurgical coal mines well positioned to integrate with Macarthur’s PCI coal mines in the Bowen Basin.

Anglo American’s metallurgical coal business put on a “fantastic” ramp up of production in the second quarter after the floods that swept through Queensland in the first quarter, chief executive Cynthia Carroll said.

Speaking at the release of the company’s global half-yearly profit announcement earlier this year, Carroll said metallurgical coal made a significant contribution to Anglo American’s first half operating profit, which is up 40% year-on-year to $US6 billion.

“In the case of metallurgical coal, we've seen a fantastic increase in response in terms of production – 77% up in the second quarter versus the first quarter of this year,” she said.

Macarthur directors last month recommended shareholders accept a takeover offer from Peabody Energy and ArcelorMittal after the joint bidding vehicle PEAMCoal agreed to up the offer by 50c to $16 per share.

The directors – who previously reported they were in discussions with other companies over a better offer – said shareholders would also receive the final dividend as part of the revised PEAMCoal offer.

Macarthur has also warned shareholders that if PEAMCoal’s sweetened cash offer is unsuccessful, and there are no rival offers, its shares may trade at a discount to the $16 per share offer price.

In its target’s statement, Macarthur outlined the reasons why the directors recommended shareholders accept the Peabody/ArcelorMittal-backed offer.

“The PEAMCoal offer delivers value for shareholders and provides a significant premium to Macarthur’s recent share price trading history prior to the announcement of the takeover proposal,” DeLacy said.

“By accepting the PEAMCoal offer, Macarthur shareholders are able to crystallise cash value for their shares and remove any ongoing exposure to market, regulatory and other risks that Macarthur may face in the future, assuming the PEAMCoal offer becomes unconditional.”