In the space of 24 hours Australia’s resources sector has hotted up with $12.5 billion in bids, one in gold (see below) and one in coal.
America’s biggest coal company, Peabody Energy Corp has swooped and made a last minute $3.3 billion takeover bid for Macarthur Coal, the Queensland-based miner.
The Peabody move also came at a slim price premium of 7.5%, which is hardly a knockout blow.
Macarthur directors rejected the offer proposal and said shareholders would go ahead with a meeting on April 12 that could deliver a dominant 24.6% stake in the company to the growing Asian trading house, Noble Group.
Macarthur shares traded at $12.09 on Tuesday, which valued it at $3.075 billion, while the "indicative, non-binding" offer from Peabody is $13 a share.
Investors gave that the thumbs down yesterday, after the announcement, pushing the Macarthur price up to a high of $14.50, before the stock settled to close at a strong $14.05, up $1.96, or more than 16% on the day.
Investors seem to be thinking the swoop might trigger a takeover battle for the Brisbane-based miner, which is the world’s biggest seaborne producer and exporter of pulverised coking coal which is used in the steel industry.
Macarthur’s share register is dominated by some big players: Citic Australia Coal, the big Chinese controlled trading group, owns 22.4%; ArcelorMittal, the world’s biggest steelmaker, holds around 16.6% and the world’s fourth largest steel group, South Korea’s Posco has 8.3%.
The suggested price though is on the skinny side.
It seems to be an attempt to get the company on the cheap before existing shareholders see the benefits of big price rises now flowing out of coking coal settlements (50% and more) with the likes of BHP and other big exporters.
These price rises flow on to the types of coal Macarthur (and Peabody) export.
Macarthur directors quickly rejected the offer saying it’s not in the best interests of the company.
The move by Peabody comes as Macarthur is moving to complete a takeover deal involving Gloucester Coal of NSW and other assets controlled by the Asian trading house, Noble Group.
That deal would have given Noble a 24.6% stake in Macarthur.
Peabody already operates eight mines in Queensland and NSW and is a major exporter of coking coal and thermal coal to the steel, power and cement industries of Asia.
Macarthur Coal had earlier requested a trading halt after telling the market it had received an approach on a possible takeover bid for the miner.
Macarthur said in a letter to the stock exchange that it requested the trading halt "pending the release to the market of an announcement regarding an approach by a third party for a controlling interest".
In its second statement Macarthur said the "Indicative Proposal is non-binding and conditional on a number of items including, but not limited to:
- Appropriate support being received from Macarthur’s three major shareholders (CITIC Resources Holdings Limited, ArcelorMittal SA and POSCO) who collectively hold approximately 47.4% of the Macarthur register;
- The Gloucester Offer not proceeding;
- Satisfactory completion of a limited due diligence review; and
- FIRB approval.
"Macarthur intends to proceed with the shareholder meeting scheduled for 12 April 2010 to consider the proposed issue of Macarthur Coal shares to Noble Group Limited under the takeover of 100% of Gloucester Coal Ltd and the acquisition of Noble’s interest in the Middlemount Coal joint venture.
"The Board continues to recommend that shareholders vote in favour of the resolution at that meeting."
"Furthermore, the outlook for coal markets has improved significantly over the past quarter.
"Peabody has advised Macarthur that it has initiated discussions with Macarthur’s three major shareholders in relation to an aspect of the proposal that may provide these shareholders with an ability to retain their respective interests in a privatised Macarthur, in an unlisted entity controlled by Peabody; however, Macarthur has been advised that at the current time no agreements have been entered into with those shareholders. Peabody has indicated that its preference would be to proceed by way of scheme of arrangement.
"Notably, AME Mineral Economics ("AME") has increased its forecasts for JFY10 and JFY11 LV PCI prices from US$115/t and US$118/t respectively in January 2010 to US$175/t and US$180/t respectively in March 2010, representing price increases of 52% for JFY10 and 53% for JFY11."
Price rises of that nature will boost Macarthur’s earnings, especially in the 2010-011 financial year.
And Thursday morning Lihir Gold revealed it has rejected a $A9.2 billion unsolicited takeover bid from rival gold miner, Newcrest.
News of the rejection was contained in a statement to the ASX.
Lihir said Newcrest offered one of its shares for every nine Lihir shares plus 22.5 cents cash a share,.
Directors said the bid undervalued the company.
“While the board recognized the strategic merits of the combination of the two companies, following careful review and analysis, directors unanimously determined that the offer did not represent good value for LGL shareholders,” Lihir said in the statement.
The offer values Lihir shares at $A3.87 each, the co
