Tinkler swoops on Whitehaven with $5.2B offer

MINING magnate Nathan Tinkler has taken advantage of the low coal prices caused by the Chinese economic slowdown to make a formal offer for all of Whitehaven Coal that values the New South Wales producer at $5.25 billion.
Tinkler swoops on Whitehaven with $5.2B offer Tinkler swoops on Whitehaven with $5.2B offer Tinkler swoops on Whitehaven with $5.2B offer Tinkler swoops on Whitehaven with $5.2B offer Tinkler swoops on Whitehaven with $5.2B offer

Nathan Tinkler

Lou Caruana

There was some doubt that Tinkler could manage to finance his privatisation bid for Whitehaven after he first showed his hand on June 13 – just two months after he successfully merged his Boardwalk and Aston Resources companies with Whitehaven in a $5.1 billion deal.

But Tinkler – who is now a resident of Singapore – is believed to have been negotiating with Asian buyers and financiers to assist with Friday night’s proposed $5.20 per Whitehaven share takeover offer.

Tinkler is currently a 21.4% shareholder of Whitehaven, whose shares have fallen by 20% over the last 10 days, erasing any takeover premium factored in when he made his initial non-binding offer.

Apart from the global meltdown on shares last week caused by the China slowdown and European debt woes, there was concern that the commissioning of the company’s Narrabri longwall mine in NSW was having problems.

Whitehaven said in an announcement on Friday that 48.3% of the company’s shareholders have expressed interest in rolling their shares into BidCo, the Tinkler Group led bid vehicle.

Managing director Tony Haggarty will sit on an independent committee to assess the Tinkler bid.

The Tinkler Group will conduct due diligence over a four week period, during which time Whitehaven has agreed not to solicit other proposals.

“I think the proposal is reasonable in the circumstances,” Haggarty reportedly told the AFR. “I think our shareholders would want us to give it our consideration.”

Tinkler previously showed shrewd timing when he acquired Rio Tinto’s Maules Creek mine in New South Wales when the mining giant was under pressure during the global financial crisis. This mine became the key asset of his company Aston Resources, which he subsequently floated on the Australian Securities Exchange at a favourable valuation to his Maules Creek purchase price.

More than $US25 billion worth of merger and acquisition deals have reportedly been made in the Australian coal sector over the last 18 months, with many executed at a time of lower share prices brought about by the European debt crisis.

“The potential takeover highlights the continuation of consolidation within the space and at a time where equity markets are weak but longer-term demand by end users is still apparent,” Foster Stockbroking said in a research note.

“Over $25 billion in deals have been secured across the coal sector in Australia over the last 18 months resulting in many of the large-cap ASX-listed coal companies disappearing off the boards.”