Macarthur Rejects Reduced Peabody Offer

Shares Plunge As Miner Rejects Bid

Macarthur Coal Ltd., the world’s largest pulverized coal producer, has rejected the latest bid from Peabody Energy Corp.’s saying it is too low. Macarthur’s two biggest shareholders, Citic and ArcelorMittal are also expected to reject the bid.

Peabody reduced its offer from A$16 a share to A$15 a share, citing its due diligence review of Macarthur’s finances and the Australian government’s plan to bring in a ‘super tax’ on mining companies’ profits.

Shares in Macarthur fell over 20 per cent on the news to close at A$11.25 a share.

Macarthur Cool On Peabody Offer

"Not Inclined To Take A Discount" - Chairman

The Chairman of Australian coal miner Macarthur Coal has said that Peabody Energy’s lowered takeover will be hard to recommend.

Keith Lacy is quoted in the Australian Financial Review as saying that while acknowledging the Australian government’s proposed 40 per cent tax on mining companies’ profits makes it harder of Peabody to pay top dollar, he added "we're not inclined to take a discount for a tax that may never be introduced."

The “super tax” is expected to be introduced from July 2012.

Peabody lowered its cash offer yesterday by one dollar to A$15 per share citing the proposed tax and following its due diligence exercise.

Shares in Macarthur Coal closed down1.9 percent to A$13.12 on the Australian stock exchange, their lowest level since 30 March and 13 percent below Peabody’s reduced cash offer.

Macarthur Coal Says Profits May Fall

Macarthur Income May Be 39 Per Cent Down

Australian coal miner Macarthur Coal Ltd has said that full-year profits may fall as much as 39 percent from a year ago after a fall in prices.

Net income may be A$103 million to A$113 million for the year ending 30 June from A$168.6 million in 2009, the company said in a statement to the Australian stock exchange.

Macarthur is currently the target of a A$4.1 billion ($3.8 billion) takeover offer from America’s Peabody Energy.

“Profitability in the June 2010 quarter has improved given recent coal price settlements with higher prices starting April 1”, the company said in the statement. Macarthur said it is still on course for full-year sales volumes of 4.8 million to 5.0 million tons.

Coking coal prices have risen sharply in recent months after the global steel industry came into recovery. A number of global coking coal suppliers including BHP Billiton, Rio Tinto and Teck Resources won a shift from annual to quarterly contracts and a rise of 55 per cent for supplies in the April to June quarter. Australia’s Centenntial Coal also warned of a tightening in the global supply of the product.

Peabody asked Macarthur, the world’s largest exporter of pulverized coal, for more information after completing a review of its finances yesterday. The American miner is also said to be concerned after the Australian government announced on Sunday that it plans to bring in a new 40 per cent tax on mining company’s profits. Macarthur said on Tuesday that the new tax had a brought an air of uncertainty to the industry.

Noble May Make Fresh Approach To Macarthur

New Offer May Come This Week

The Australian Financial Review’s Street Talk column reported in its Wednesday edition that Noble Group Ltd may be preparing to make a new approach to Macarthur Coal as early as this week.

Last week Noble saw a deal rejected by its shareholders in which it would have become the largest shareholder in Macarthur.

Macarthur is currently in talks with US miner Peabody Energy Corp., which has made a A$4.1 billion cash offer for the company.

Noble Shareholders Reject Gloucester Coal Sale

Trader Also Does Not Agree With Peabody Offer

Singapore commodity trader Noble Group said on Monday that its shareholders have rejected a resolution proposing the sale of the firm's stake in Gloucester Coal to Macarthur Coal. The company said the proposed conditions give different options to large and small shareholders.

The resolution, rejected by shareholders voting at a meeting in Hong Kong, would have given the firm a 24 per cent stake in Australia's Macarthur, the subject of rival bids as firms compete for its cleaner coal.

Noble also said in a statement it did not agree with US coal company Peabody Energy's proposed $16 per share takeover of Macarthur.

"Having come up the hard way, and in the not too distant past being pretty small ourselves, we are very opposed to the spirit of the Peabody transaction," the company said in a statement.

New Hopes Weighs Up Alternatives To Macarthur

Company Will "Look Somewhere Else" If Bid Fails

Australia’s New Hope Corporation, which last week had a revised takeover bid for Macarthur Coal turned down, has said that it will look for other acquisitions if, as seems likely, its bid for Macarthur is unsuccessful.

Speaking to Australia’s ABC TV network on Sunday, New Hope Chairman Rob Millner said “Obviously there are other avenues for us. If we can’t find anything in coal, we’ll have to go and look somewhere else. Going forward, there’s a real shortage of particularly pulverized coal in the world, and most of the ports around the world are constrained by capacity, so I see a good future for coal, both thermal and PCI coal.”

Commenting on the Macarthur bid, Mr Millner said: “If we secured Macarthur that would probably steady us up for the time being (with acquisitions). But, you know, it's certainly going to create a very large independent coal company with a market capitalisation of well over $8 billion and it would be in the top 30 to 40 companies within Australia."

Meanwhile, Andrew Harrington, a coal analyst at Paterson Securities, told ABC “They [New Hope] don’t have any debt on their balance sheet. They’ve got A$1.5 billion in cash in the bank and probably another half billion coming from the sale of their Arrow Energy shares, so they could easily plonk down the cash and raise some financing to afford this.”

New Hope’s revised takeover bid for Macarthur - its second bid - included A$950 million in cash, but it was rejected by the Macarthur board on 15 April. Macarthur said the New Hope bid did not represent an adequate premium for control of the company. Macarthur said on Friday that it intends to enter into talks with US miner Peabody Energy, which raised its bid to A$16 a share, valuing Macarthur at A$4.1 billion.

Peabody Ups Macarthur Offer

New Offer is $16 a share

American miner Peabody Energy has upped its takeover offer for Australian coking coal miner to $16 a share. The offer values Macarthur at $4.1 billion and is Peabody’s third bid for the company.

In its bid, Peabody said it is “clearly superior” for Macarthur’s shareholders to accept their offer rather than taking over Gloucester Coal.

Meanwhile, Gloucester Coal itself says it has doubled the prices it has achieved to US$180 a tonne compared to US$90 a tonne last year.

No Plans To Sell Macarthur Stake - POSCO

Stability of supply is reason for stake

South Korean steelmakers POSCO, has reiterated its desire to hold on to its stake in Australian miner, Macarthur Coal, in the face of a bidding war.

"Ninety-nine percent of our investment purpose in Macarthur is to secure a stable supplier," Kwon Young-tae, POSCO's senior vice president, told Reuters after a conference with analysts.

POSCO will continue to review the proposed merger between Macarthur and Gloucester saying it had made no decision yet on whether to support the deal.

POSCO is one of Macarthur’s three largest shareholders. The Australian miner has rejected bids from America’s Peabody Energy and Australia’s New Hope. Global miner Xstrata has also been rumoured to be preparing a bid.

An archive on the Macarthur takeover battle is available here.

Xstrata Approaches Macarthur Shareholder

Approach Suggests Bidding War Likely

Macarthur Coal, currently the subject of a takeover battle, involving America’s Peabody Energy Group and Australia’s New Hope – amongst others – has said that global miner Xstrata has approached a “substantial” shareholder in Macarthur. The ove suggests that Xstrata may be about to join the fray.

``Macarthur advises that it has become aware that an investment bank representing Xstrata has approached one of the major shareholders in Macarthur,'' Macarthur said in a statement. The discussion was ``preliminary and highly conceptual,'' the company said, adding it had no further details.

The Australian Financial Review suggested on Friday that Xstrata had approached two of Macarthur’s biggest shareholders, POSCO and ArcelorMittal, about a joint bid for Macarthur. Macarthur has already rejected two bids from Peabody as well as a $3.4 billion bid from New Hope.

Also on Friday Macarthur announced that a shareholder’s meeting on Monday to vote on its takeover of Noble Group’s Gloucester Coal had been postponed for a week to allow shareholders more time to digest information on the deal. Peabody had previously asked Australia’s Takeover Panel to have the meeting postponed.

With this latest development it is thought that Xstrata in a bidding war. Macarthur is Australia’s biggest exporter of pulverised coal used by steelmakers.

Macarthur shares closed the week at $15.51 a share – some 6% more than the highest bid, New Hope’s $14.58 a share.

Macarthur Postpones Shareholder Meeting

Gloucester Coal Vote Deferred By A Week

Australian miner Macarthur Coal has announced a one-week delay in a shareholder vote on whether to take over smaller rival Gloucester Coal Ltd.

In a statement on Friday the company said that a shareholder meeting due to take place on Monday will now take place on 19 April.

The company has delayed the vote after some shareholders complained there was not enough time to review all the information the company has disclosed with regards to the matter.

Macarthur is fighting a takeover battle with America’s Peabody Energy. Earlier on Friday Macarthur rejected a counter-bid from Australian coal miner New Hope.

Macarthur Rejects New Hope Bid

Xstrata "Mulling Own Bid" - Report

Australia’s Macarthur Coal has rejected a $3.4 billion bid from rival Australian miner, New Hope.

New Hope has made an all-share offer worth $14.58 a share, a 58c premium over the rival bid from the US’s Peabody Energy.

Macarthur’s shares closed at $15.50 – a rise of 8.2% on the day.

Macarthur has announced that a meeting on Monday to discuss a deal with Hong Kong’s Noble Group will take place as planned on Monday. Peabody has tried to get Australia’s Takeover Panel to stop the meeting from taking place.

Meanwhile, the Australian Financial Review reported on Friday that international mining company Xstrata has approached two of Macarthur’s shareholder, POSCO and ArcelorMittal, about a bid to rival the offer from America’s Peabody Energy.

The newspaper did not disclose its source for the information.

Peabody Asks Takeover Panel To Intervene In Macarthur Bid

US coal miner Peabody Energy has asked Australia’s Takeover Panel to block a shareholders’ meeting on Monday by takeover target Macarthur Coal to approve Macarthur’s acquisition of Noble Group subsidiary, Gloucester Coal.

If Monday’s meeting approves the Gloucester acquisition it would give Noble Group a stake of 24% in Macarthur effectively blocking Peabody’s bid for the Queensland miner.

Peabody wants the panel to provide an updated independent expert's report on the Gloucester bid and for the Macarthur shareholder vote on that bid delayed until at least two weeks after the report has been sent to shareholders.
Macarthur’s response was it was justified in not engaging with Peacock on the basis that the conditional bid was “not a superior proposal” to the Gloucester/Noble transaction. It said that this resulted in it not being permitted to engage under its Gloucester agreement.

"It is disingenuous for Peabody to now seek to delay the shareholder meeting in circumstances where it has not made a binding offer to Macarthur shareholders," Macarthur said in a statement to the stock exchange, adding "Your directors believe the Peabody [press] advertisements are self-serving and potentially misleading."
Macarthur rejected an independent report compiled in February which valued its shares at below the Peabody bid, saying that the report did not take into account gains in coal prices since then.

It rejected Peabody claims that Noble would have a controlling influence over Macarthur. It also said that a February independent expert's report valuing Macarthur shares at below Peabody's bid was out of date and did not take into account gains in coal prices.

Macarthur shares rose 5c on Thursday to $14.36, 36c higher than Peabody’s $14 a share bid.

Meanwhile the Australian Financial Review suggested that Macarthur is holding out for a $15 a share bid and that Peabody was offering major shareholders Posco, Citic Pacific Ltd. and ArcelorMittal to persuade them to accept the bid. The newspaper gave no source for its report.