Aussie Miner OKs Sweetened Deal

Tuesday, August 30, 2011 @ 03:08 PM gHale

Australian mining company Macarthur Coal agreed to a $5.2 billion takeover by ArcelorMittal and Peabody Energy.

The company, a specialist producer of pulverized coal sought after by steel makers, is one of the last remaining independent midsize miners in Australia and was an attractive acquisition target.

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Rising raw material prices and a desire by resource companies and steel makers to meet ravenous demand from China and other rapidly growing emerging economies have spurred consolidation in the sector in recent years. Macarthur, based in Brisbane, last year turned down two bids by rivals and a major asset swap plan with another company.

Last month, it spurned a fresh offer by ArcelorMittal and Peabody of 15.5 dollars a share, prompting the pair to take their bid directly to shareholders on Aug. 1. ArcelorMittal, with $78 billion in annual revenue, already holds a 16 percent stake in Macarthur.

At the time, Keith DeLacy, chairman of Macarthur, said the bid appeared to be an “opportunistic attempt” to acquire the miner at a time of global economic volatility and regulatory uncertainty in Australia.

The country is considering implementing a carbon tax and a resource tax, both of which would affect the mining sector.

On Tuesday, Peabody Energy, based in St. Louis, and ArcelorMittal nudged up their joint offer by 3 percent, to 16 dollars a share. The bidders are seeking at least 50.01 percent of the coal miner.

“In the period since the initial offer, a number of parties have conducted due diligence,” Macarthur said in a statement, adding the company’s board was recommending the raised bid to Macarthur shareholders. “Although it remains possible that a superior proposal might be made, none have emerged to date and there can be no assurances that any will emerge.”

“This is a major step forward in our acquisition process,” said Gregory H. Boyce, the Peabody chairman and chief executive.

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