2nd UPDATE: Peabody, ArcelorMittal Raise Offer For Australia's Macarthur
14 Luglio 2011 - 11:31AM
Dow Jones News
The world's largest private-sector coal miner and the largest
steelmaker by output on Thursday sweetened their offer for
Australian pulverized coal miner Macarthur Coal Ltd. (MCC.AU) to
around A$4.73 billion (US$5.05 billion), while moving a step closer
to success by agreeing to start due diligence on the deal.
Peabody Energy Corp. (BTU) and ArcelorMittal (MT) said Monday
they would start receiving data and site access from Macarthur from
the coming Monday.
St. Louis-based Peabody and Luxembourg-domiciled ArcelorMittal
made an indicative A$15.50 per share bid for Macarthur, the world's
largest miner of pulverized steelmaking coal, according to the
announcement Monday.
The indicative offer was treated as an upper limit that would be
lowered by subtracting the value of any final dividend declared by
Macarthur's board.
However, in exchange for agreeing to start due diligence,
Macarthur has said any offer made in the next 12 months must treat
A$15.50 as a floor price that would not include the value of
dividend payments up to 16 cents a share.
That provision would raise the value of the deal by around
A$48.3 million to A$15.66 a share or more, or around 1% above
Monday's indicative offer. Macarthur said the latest proposal
wasn't binding and shareholders should take no action.
Gregory Lafitte, head of Asian merger arbitrage at Louis Capital
in Hong Kong, said the latest move suggests the takeover is likely
to go ahead, though he added the partners would likely have to
raise their offer to at least A$16 to win over Macarthur's
shareholders.
"I'm not pessimistic. I think it will go through now," he said.
"Obviously, it's still non-binding, so at any time they could
withdraw the offer. But the market seems to be quite confident
about the deal."
Macarthur shares, which jumped 37% Tuesday after the offer was
announced following the end of trading Monday, rose 11 cents to
A$15.40 after the latest announcement Thursday, before settling
back to A$15.34 at the close of trade in Sydney.
The indicative A$15.50 offer represented a 40% premium to
Macarthur's closing share price Monday.
"The Macarthur board is currently preparing an evaluation of the
company's assets and resources and is exploring options to maximize
value," it said.
Macarthur has a policy to pay out 50% of its net profit in
dividends, suggesting its full-year payout would be 17.85 cents,
according to a consensus of brokers provided by ThomsonONE.
The company operates mines in Queensland state's Bowen Basin,
which are expected to have produced 3.8 million-4.0 million tons of
coal in the year ended June 30. It hopes to raise this output to
9.2 million tons by 2014.
Macarthur is seen as a good fit for Peabody and ArcelorMittal,
which respectively hold 60% and 40% of the company through which
they are bidding for Macarthur. Peabody, which accounts for 10% of
U.S. electricity generation, plans to increase its exposure to the
Asian region, while ArcelorMittal has a policy of buying its own
mines to decrease its dependence on outside companies for its
steelmaking raw materials.
Peabody has also been awarded provisional operating rights at
Mongolia's Tavan Tolgoi coking and thermal coal project. The
company will hold a 24% share in the consortium to develop the Gobi
Desert site, while Shenhua International Ltd., China's largest coal
producer by revenue, will have 40%. A Russian-led group will have
the remaining 36%, with the Russian parties holding 18% and its
Mongolian partner the other 18%. Investments required for the
project have been estimated by analysts at least US$7 billion.
Peabody made several offers for Macarthur last year of between
A$13.00 and A$16.00 a share, and spent five days reviewing 390
documents as part of its due diligence on the bids before they were
abandoned after Australia's government unveiled mine tax plans that
many companies feared would be too onerous.
One analyst at a European investment bank in Sydney said the
partners may still have to raise their offer to win over minority
investors. ArcelorMittal already has a 16% stake in Macarthur, and
just 50% of the company's shareholders will have to back the deal
for it to go through. However, 31% of the company is held by
Chinese investment group CITIC Group and Korean steelmaker POSCO
(005490.SE).
"They must have a pretty fair idea of what is required to get an
agreement but if they wanted a recommended offer I suspect they'd
have to pay more. It would be surprising if it was the final
offer."
The next-biggest declared shareholder, Fidelity Investments,
said Thursday it had sold around 40% of its holdings, leaving it
with a 3.55% voting stake. Long-term fund managers frequently sell
out of companies facing takeover bids, leaving the shares in the
hands of event-driven funds that hope to profit from the
uncertainty.
-By David Fickling, Dow Jones Newswires; +61 2 8272 4689;
david.fickling@dowjones.com
--Simon Hall contributed to this article.
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