2nd UPDATE: Peabody Lowers Offer For Macarthur Coal To A$15/Share
May 10 2010 - 4:18AM
Dow Jones News
Peabody Energy Corp. (BTU) Monday lowered the value of its bid
for Macarthur Coal Ltd. (MCC.AU), citing the Australian
government's announcement last week of a planned 40% resources
super profits tax and following Peabody's due diligence of the
Australian coal miner.
The U.S-based coal company is offering Macarthur shareholders
A$15 cash for each share, down from a prior offer for A$16 a share,
valuing Macarthur at A$3.8 billion.
Market participants had forecast Peabody could lower its bid
following the government's tax announcement, which analysts
estimated could reduce Macarthur's value by up to 18%.
The Australian government's proposed tax has generated
widespread criticism from resources companies, some of which have
said the tax could lead them to delay or abandon development of
certain projects.
Peabody's revised offer is a swift turn of events from just a
few weeks ago, when it lifted its bid for Macarthur twice to
compete with New Hope Corp., which was also bidding for the coal
producer.
Anglo-Swiss miner Xstrata PLC also approached Macarthur's major
shareholders and appointed advisors for a potential bid, according
to Macarthur, but an offer never emerged from Xstrata.
An industry source said neither New Hope nor Xstrata are
actively pursuing Macarthur but Macarthur's board isn't likely to
rush to consider the new offer.
Macarthur recommended shareholders take no action on the new
proposal. The board has yet to set a meeting to review it, the
industry source said.
The U.S. coal company remains willing to offer Macarthur's three
major shareholders, Citic Resources Holdings (1205.HK),
ArcelorMittal (MT) and Posco (005490.SE) the opportunity to retain
their economic interest in Macarthur. The support of the key
shareholders is uncertain. Citic (1205.HK), for one, hadn't thrown
its support behind the prior, higher bid.
Macarthur's shares were down 1.9% to A$13.43 as of 0429 GMT,
indicating that investors don't expect the proposal will be
successful.
The scheme of arrangement put forward by Peabody requires
approval from 75% of shares voted, which means support from
Macarthur's major shareholders is needed.
A takeover, depending on how it is structured, could require
just 50% approval. That could be executed with more ease
considering Posco and ArcelorMittal, if they were on board,
represent nearly 25% of shares outstanding.
Citic, Macarthur's biggest shareholder with a 22.4% stake, said
it didn't have enough information to assess the prior A$16/share
offer while Posco gave in-principle support for that bid and
ArcelorMittal said it was worth considering.
The major shareholders either wouldn't comment or weren't
immediately available Monday.
Peabody called the A$15/share proposal a "definitive" offer.
Currently, the three major shareholders own about 47% of
Macarthur.
"The definitive proposal delivers a clear, compelling and
significant premium for Macarthur shareholders, and follows
Peabody's due diligence as well as the introduction of the
Australian resources profit tax proposal," Peabody said in a
statement.
The U.S. energy company is encouraging Macarthur's board to move
quickly on its offer.
-By Cynthia Koons; Dow Jones Newswires; 61-2-8272-4691;
cynthia.koons@dowjones.com
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