Macarthur considers Peabody bid

MACARTHUR Coal has scrapped the Monday shareholder vote on its proposed takeover of Gloucester Coal, as its major steelmaking stakeholders are not opposing Peabody Energy’s latest $A16 per share cash offer.
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Blair Price

The Queensland company is not recommending its shareholders act on Peabody’s deal, but said it would enter discussions with the St Louis-based coal producer.

Consequently, the board has postponed the extraordinary general meeting scheduled for Monday and said a new date would be advised.

The move will upset commodities trader Noble Group, which was placed to earn almost a quarter of Macarthur’s share registry through the Gloucester transaction.

The key change to Peabody’s previously rejected bids was announced this morning, with the company stating it is after a controlling interest in Macarthur as opposed to a full takeover.

The latest revised offer provides for Macarthur’s three major stakeholders keeping their interests in the company, important for steelmakers ArcelorMittal (16.6%) and POSCO (8.3%), which need to ensure their supply of metallurgical coal.

Earlier today Macarthur disclosed the feedback it had received from the steelmakers.

POSCO confirmed “in-principle” support for Peabody’s latest $4.1 billion offer, in the absence of a superior proposal.

“POSCO presently intends to retain its existing economic interest in the resultant private company structure,” the steelmaker said.

ArcelorMittal went further, saying Peabody’s offer deserved consideration and time for five days due diligence.

Peabody was pleased with the outcome and welcomed the comments from the two steelmakers.

“We continue to believe that a combination of the two companies would offer a strong complementary fit, creating a substantial Australian operating platform with excellent capabilities and resources,” Peabody said.

“Both companies have an organic growth pipeline that is set to double metallurgical coal volumes within the next five years to serve high-growth Asian markets.”

CITIC Resources remains supportive of the Gloucester transaction but said it was not yet in a position to make an informed assessment on Peabody’s latest proposal.

“CITIC will continue to carefully monitor and analyse all developments and expressly reserves the right to vote its 22.4 per cent shareholding in any manner that it determines at its absolute discretion," the company said according to a Macarthur release this morning.

Patersons Securities coal analyst Andrew Harrington previously said Peabody would gain more metallurgical coal export exposure through acquiring Macarthur.

New Hope has also thrown its hat in the ring, and recently added a $16.50 per share cash option to its takeover offer for Macarthur shares, but the total cash it would pay was capped at $950 million.

Xstrata is yet to reveal its hand but Macarthur has previously disclosed that the Swiss mining giant has approached one of its major stakeholders.

Macarthur shares closed up 8% to $16.54 on Friday.