DealBook: Peabody and Arcelor Seek Control of Macarthur Coal

Macarthur Coal is back in play, more than a year after it rejected a takeover offer.

The company said on Monday that Peabody Energy and ArcelorMittal had offered to take a controlling stake in Macarthur for 15.50 Australian dollars a share, valuing the coal miner at 4.7 billion dollars ($5.1 billion).

In May 2010, Macarthur’s board rejected an offer from Peabody of 15 dollars a share, calling it too low.

This time Peabody, an American coal company based in St. Louis, is teaming up with one of Macarthur’s largest shareholders, the steel maker ArcelorMittal.

Arcelor holds about 16 percent of Macarthur, second only to Citic, the Chinese state-owned investment company that has a 24 percent interest; Citic opposed the offer from Peabody last year.

Citic, which also has a coal supply agreement with Macarthur, made it known at the time that it was unwilling to sell at any price. In conjunction with another major investor, the South Korean steel maker Posco, Citic can effectively block a takeover. In Australia, an acquirer must have 90 percent of shares to move forward with its plans.

If Macarthur remains a listed company in which Peabody and Arcelor simply hold a controlling interest of 50.01 percent or more, it would be difficult for the new owners to make significant changes to management, a person with knowledge of the matter said.

Peabody had initially bid 16 dollars a Macarthur share last year, but cut its bid after the Australian government began to consider a resource tax proposal.

There has been additional pressure on Australian miners. On Sunday, Prime Minister Julia Gillard’s Labor Party government disclosed the details of its carbon tax, which would impose a charge of 23 dollars on each metric ton of carbon emissions a company produced. Coal mining companies will be taxed for so-called fugitive emissions, or gases that escape naturally during their operations.

The planned carbon tax failed to discourage Peabody and Arcelor from their bid for Macarthur, but still weighed on many Australian stocks on Monday.

Macarthur’s shares, which closed Friday at 11.40 dollars, opened on Monday at 10.99 dollars, before rising to 11.08 dollars after news of the takeover bid.

The company, based in Brisbane, was also hit by floods that devastated Queensland last year. The natural disaster cost the company tons of production, although that was mostly offset by a rise in coal prices on fears it would become scarce.

Macarthur is known for its pulverized coal, a key ingredient in the steel-making process.

Article source: http://feeds.nytimes.com/click.phdo?i=1dd2ac0e5e12941c74107ce5c1ab5eb0