Whitehaven Coal says its planned merger with Gloucester Coal is superior to a rival $490 million bid by Noble Group.
Whitehaven's comments came as Gloucester announced it has appointed PricewaterhouseCoopers as an independent expert to assess the relative merits of the two deals.
Gloucester said work on the independent expert's report was well advanced and it expected to be able to release the report to the market on May 18, just ahead of the May 21 deadline set by Australia's Takeovers Panel.
Meanwhile, Noble has gone back to the Takeovers Panel for a clarification of its orders as it seeks to extract a quick response from Gloucester to its bid, according to people familiar with the situation.
Whitehaven told investors today the merger proposal was superior to the Noble deal and would give Gloucester shareholders a chance to participate in the upside of a larger, diversified miner.
"Noble's cash bid is opportunistic and substantially undervalues (Gloucester)," Whitehaven said in a presentation.
"It is clearly in the interest of Noble shareholders, but not (Gloucester) shareholders."
Whitehaven said the planned merger would create upside for Gloucester shareholders and unlock synergies that were being captured by coal traders including Noble.
Gloucester has entered into a binding agreement to proceed with the Whitehaven merger, which is effectively a reverse takeover of the smaller Gloucester by Whitehaven.
However, the Takeovers Panel has ordered that the merger deal must be subject to a condition that no superior proposal is made by May 21.
Noble has accused Gloucester of dragging its heels in making a decision on which deal was superior and said it was doing so for "purely tactical reasons".
"Gloucester directors are using delaying tactics to maximise the chance of the Whitehaven merger proceeding," Noble chief executive Richard Elman said yesterday.
With coal stocks on the rise and the outlook for coal prices showing signs of improvement in recent weeks, Noble faces the prospect that delays by Gloucester could make its bid look less attractive relative to the Whitehaven merger.
Nobel refers to the implied value of the Whitehaven offer being $4.83 per Gloucester share, based on Whitehaven's share price the day before Nobel announced its $6 a share bid.
However, Whitehaven's price has been on the rise and at current prices that implied value has risen to about $5.30 a Gloucester share.
"Whitehaven has had a good run and that value gap is closing," one analyst said.
Whitehaven said in its presentation that demand for thermal coal remained strong but demand for export coking coal remained weak.
Source: The Australian
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