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Macarthur dig site
The money offered by Peabody and ArcelorMittal represents around $15.50 per share and a 40% premium to the Monday trade session. This comes after the Australian government announced the new plan regarding the carbon emission taxes. This plan was approved because Australia is considered to be the worst polluter of the world.
This offer also comes in the middle of the many takeovers that take place every day and are related to the Asia-Pacific firms. On Monday are also announced to take place other four multi-billion-dollar deals that involve the coal sector.
The officials of the Macarthur Company didn’t make any statements regarding the proposal made by Peabody and ArcelorMittal. The only thing they said was that they want to discuss some more with these companies about the price and the terms involved. Citic’s position regarding this announcement wasn’t clear either. Citic is a Chinese company which is a key shareholder of Macarthur Coal.
It’s known that Macarthur passed through a three-way bidding war in 2010 when its officials decided to talk with Peabody which offered the highest price ($16 per share). Unfortunately, the discussions were dropped after Peabody reduced its offer because of the government’s decision to introduce a mining tax for the companies involved in the coal and iron ore mining sector.
The current situation regarding the new Australian carbon emission regulation is different from the 2010 situation. That’s because Peabody joined forces with ArcelorMittal and managed to lock “away some pre-bid acceptances for the first time” according to Hayden Bairstow, a mining analyst of CLSA Asia Pacific.
Peabody which became one of the largest coal miners in Australia decided to double its presence in Australia. ArcelorMittal is the world’s biggest steel company and is participating in the bid because it’s currently trying to ease the “pain of rising” raw material costs.
Both companies announced that they will make the takeover proposal through a bid company. If the proposal is accepted 40 percent of the shares obtained will belong to ArcelorMittal and the other 60 percent will be the property of Peabody.
ArcelorMittal already owns 16.2 percent of the Macarthur Company, being the second-largest shareholder. China Citic’s support (which is the largest owner of Macarthur shares – 24%) is of the essence, but, in the same time, there could be some problems because the proposal made by these companies involves the acquisition of more than 50% of the company. Citic Resources Australia, a subsidiary of Citic will study the proposal, but their decision is yet to come
Analysts consider that the proposal of Peabody and Arcelor looks opportunistic. Some of the investors were surprised by the release of the news because many thought that the leaders will wait more than a day after the announcement of the Australian government.
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