US coal giant Peabody Energy has used the proposed resource rent tax to chisel $1 a share from its offer for Macarthur Coal
The new price of $15 per share, wipes around $250 million off the total value of the proposed offer.
The $15 per share values Macarthur at $3.815 billion.
The $16 previous offer valued Macarthur at $4.069 billion.
Macarthur shares ended at down 2.2% at $13.38, a fall of 312c on the day.
"Peabody continues to be willing to provide any or all of Macarthur’s three major shareholders (CITIC, ArcelorMittal and POSCO) the opportunity to retain their economic interest in Macarthur should they choose to do so," Macarthur said.
Macarthur shares opened up 2% at $13.97 on relief that Peabody made a new bid, but by midday, it started falling, suggesting investors don’t expect a deal to go through.
The new offer is still above the cash and shares offer from rival bidder New Hope Corp, worth $US3.3 billion ($3.66 billion).
Peabody said the $16 offer was made in good faith, but was revised in light of Australia’s proposed new tax and after conducting due diligence.
"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 its statement.
It didn’t reveal was the due diligence had found.
The takeover, by way of a scheme of arrangement, would require the approval of 75%.
And that’s where CITIC could sink the offer.. It owns just over 22% of Macarthur.
If the offer remains hostile, it is likely CITIC will support the Macarthur board.
It has already suggested it’s not happy with the Peabody (or other) approach.
If it remains with the board, smaller shareholders will likely follow the board recommendation.
So the cut in the price seems stupidly short sighted.
The proposed tax won’t start until 2012 at the earliest, if ever.
There could be a change of government this year which could see the tax dropped.
Peabody is suggesting that Macarthur will pay some extra tax from 2012.
If it could tell me the price of coal, iron ore, coal or what I will be doing in 2012, I’d be mighty pleased.
