Macarthur Coal agrees to talk to Peabody on raised offer

20 April 2010 | 04:42 Code : 19927 Geoscience events
Australia’s hottest takeover target, Macarthur Coal (MCC.AX: Quote), agreed...

Australia’s hottest takeover target, Macarthur Coal (MCC.AX: Quote), agreed on Friday to talk to U.S. miner Peabody Energy (BTU.N: Quote) on its raised $3.8 billion offer, as investors bet the bidding could climb higher still.Macarthur shares surged as much as 9 percent to A$16.71, well above Peabody’s new cash offer of A$16 a share, which was unveiled late on Thursday in an attempt to knock out rival bidder New Hope (NCM.AX: Quote), another Australian coal miner."Clearly, the market is betting that someone would come back with a higher offer," said David Haddad, resource analyst at the Royal Bank of Canada.Coal producers are chasing Macarthur because it is the world’s biggest exporter of pulverised coal, a cheaper, cleaner fuel coveted by steelmakers, at a time when coking coal prices have nearly doubled on red-hot demand from China and India.There is still speculation that London-listed miner Xstrata (XTA.L: Quote) could enter the fray, while commodities firm Noble Group (NOBG.SI: Quote) is on the sidelines, backing another deal that could see it emerge with almost a quarter of Macarthur.Noble favours a plan by Macarthur to take over Noble-controlled Australian miner Gloucester Coal (GCL.AX: Quote), but that deal, which preceded the frenzied takeover battle, looks to be fading fast after Peabody raised the stakes."The board of Macarthur Coal has considered Peabody’s further proposal and intends to enter discussions with Peabody," Macarthur said in a statement, adding it was also delaying for a second time a shareholder vote on the Gloucester deal.Macarthur, named after defiant U.S. World War II General Douglas Macarthur and led by CEO Nicole Hollows, said two of its major shareholders, steelmakers ArcelorMittal ISPA.PA and POSCO (005490.KS: Quote), gave conditional support for Peabody’s new offer"The statements by POSCO and ArcelorMittal suggest they aren’t opposed to Macarthur being bought so long as they are able to keep their stakes in the company," said Haddad."That could encourage others like Xstrata to enter the ring."Xstrata has made no comment on the speculation, though Macarthur has previously revealed that the mining group had held talks with Macarthur shareholders.South Korea’s POSCO, which plans to retain its 16.6 percent Macarthur stake, gave the Peabody bid its in-principle support, while ArcelorMittal said the offer warranted giving the U.S. bidder access to Macarthur’s books for five days.China’s CITIC, Macarthur’s biggest shareholder with 22.4 percent, has not made a formal response, Macarthur said. The top three shareholders together own 47.3 percent of the company.Australia holds nearly a tenth of the world’s known reserves of coal, according to its official commodities forecaster. (Editing by Mark Bendeich and Ian Geoghegan)

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