Macarthur Coal Ltd rejected a A$3.64 billion (US$3.4 billion) takeover bid from New Hope Corp, which is battling Peabody Energy Corp and Noble Group Ltd for control of the world’s biggest producer of pulverized coal.
New Hope’s offer of 2.7 of its shares for every one of Macarthur’s, worth A$14.31 at yesterday’s close, doesn’t give an adequate premium for control, Macarthur said in a statement. Peabody raised its bid to A$14 a share this week. Macarthur closed at A$15.55 in Sydney, the highest since July 31, 2008.
The contest for Macarthur comes after coal prices doubled and China’s imports tripled last year. Xstrata PLC, the world’s biggest exporter of power station coal, and China’s Citic Group (中信集團) may also make offers, Citigroup Inc said in a report yesterday.
“The game has just started,” said Paul Xiradis, chief executive officer of Ausbil Dexia Ltd in Sydney.
“It’s obviously a prize asset and people are bidding up for it. As a shareholder, I’m pretty pleased,” he said.
Ausbil acquired its Macarthur stake last year at less than A$10 apiece, Xiradis said.
New Hope declined 1 cent to A$5.30 at the close on the Australian stock exchange. Pulverized coal is primarily used to make steel.
Australian coal producers rose in Sydney with Whitehaven Coal Ltd gaining 7.2 percent, Centennial Coal Co rising 2 percent and Coal & Allied Industries Ltd, the Australian coal unit of Rio Tinto Group, advancing 3.3 percent.
“This bidding war shows the interest the world has in Australia’s key energy resources,” said Michael Heffernan, a client adviser with Austock Securities Ltd in Melbourne.
“It just shows you the demand for our resources. They all think the growth is going to continue,” he said.
Offers may need to approach A$16 a share to win Macarthur’s support, Macquarie Group Ltd and Morgan Stanley said earlier this week.
“A full takeover offer price of around A$15 to A$16 per share would be required for non-majority shareholders to become engaged,” Macquarie analyst Sophie Spartalis said in a report.
Morgan Stanley analyst Cameron Judd also said Peabody may pay as much as A$16 a share.
While New Hope’s offer is all stock and Peabody’s offer is in cash for all of Macarthur, Noble’s deal is more complex, proposing Macarthur acquire Gloucester Coal Ltd, which is 87.7 percent owned by Noble.
If Macarthur shareholders agree to that at a meeting on Monday, Hong Kong-based Noble would become Macarthur’s largest shareholder.
Both the New Hope and Peabody bids require Macarthur shareholders reject the Gloucester takeover. Xstrata may also enter the bidding, with the Australian Financial Review saying yesterday that it had approached ArcelorMittal and Posco, two of Macarthur’s biggest shareholders, with an alternative proposal.
Macarthur directors intend to proceed with shareholder vote provided there is no “material change in circumstances,” the Brisbane-based company led by chief executive officer Nicole Hollows said yesterday, without defining what they might be.
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