Peabody Energy Corp, the biggest US coal company, offered A$3.3 billion (US$3 billion) in cash for Australia’s Macarthur Coal Ltd to benefit from rising demand in China, where imports tripled last year.
The unsolicited A$13-a-share bid sent shares in Brisbane-based Macarthur surging to A$14.05, as investors bet Peabody will have to increase its offer to win over ArcelorMittal and Posco, who paid as much as A$20 a share for their stakes. The proposal is “highly conditional” and not in the best interest of shareholders, Macarthur said yesterday in a statement.
GETTING BIGGER
“Peabody is probably looking to get bigger in a market that’s growing, especially when compared with the US,” said Andrew Harrington, an analyst at Patersons Securities Ltd in Sydney. “A bidding war for Macarthur is possible.”
The offer may thwart Noble Group Ltd’s attempt to become Macarthur’s biggest shareholder in a stock swap for the Hong Kong-based commodity supplier’s Gloucester Coal Ltd. Peabody operates eight mines in Australia’s Queensland and New South Wales states, and is seeking more to feed power stations and steel mills in China, the world’s largest user of coal.
ArcelorMittal, the world’s biggest steelmaker, holds 16.6 percent of Macarthur and South Korea’s Posco owns 8.3 percent, Bloomberg data showed.
Citic Australia Coal Ltd has 22.4 percent. Peabody is in talks with the three companies and is offering them the opportunity to retain their interest in Macarthur, it said in a statement.
The deal values Macarthur, the world’s biggest exporter of pulverized coal used by steelmakers, at 17 times earnings before interest and tax, which is more than double the EBIT multiple that Yanzhou Coal Mining Co (兗州煤業) paid for Felix Resources Ltd in a A$3.5 billion takeover seven months ago.
HITCH
Peabody’s offer is conditional on Macarthur’s takeover of Gloucester not proceeding, Macarthur said. Gloucester has recommended shareholders accept Macarthur’s A$8 a share offer.
“There is a strong strategic rationale for a combination of Macarthur’s operating assets and project pipeline with Peabody’s growing Australian platform of metallurgical and thermal coal production,” Peabody said, saying it is “disappointed” with Macarthur’s reaction to its bid.
DOUBLING OUTPUT
Macarthur chief executive officer Nicole Hollows, aiming to complete the Gloucester takeover by July, is seeking to double output in the next five years.
The company has two operations in Queensland’s Bowen Basin. Four of Peabody Australia’s mines are located in the same region, its Web site said.
“Peabody’s proposal is highly conditional and does not fully value Macarthur and its significant growth prospects,” Macarthur chairman Keith De Lacy said in a statement.
The company also said the offer did not acknowledge that “the outlook for coal markets has improved significantly over the past quarter.”
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source