Australian miner Macarthur Coal Limited exited the merger proposal of Peabody Energy Corp. (BTU) after the company revised its offer last week.
Last week, Peabody had slashed its bid for acquiring Macarthur Coal Limited, on due diligence and the new Australian proposal to tax mining profits. The company had cut down its offer to A$3.8 billion (US$3.4 billion) from A$4.1 billion (US$3.8 billion) proposed earlier.
After the meeting of the Macarthur Board of Directors for considering Peabody’s revised bid, the board arrived at the conclusion that the offer could not reasonably be recommended to shareholders. Macarthur said that even if the bid were put to shareholders, it was unlikely to succeed as its top two shareholders holding a 38.7% stake, did not back it. The offer was conditioned upon receipt of approval from 75% of Macarthur shareholders voted.
The proposed deal was sacked after Macarthur’s two major shareholders, China’s CITIC Resources (22.4% interest) and steel giant ArcelorMittal (16.3% interest), rejected the offer. CITIC Resources did not find Peabody’s offer attractive and said that the long-term strategic value of the company was significantly greater than the offer.
Macarthur’s third-largest shareholder, South Korea’s POSCO (8.3% interest) was the only one of the major three shareholders willing to take up Peabody’s offer. Macarthur’s shares fell in response to the news.
Prior to this, Macarthur had turned down takeover offers from Australian rival New Hope, valuing it at A$14.50 per share, and an offer from the Hong Kong-based Noble Group (NOBG.SI).
Peabody expressed disappointment that the board of Macarthur Coal has turned down its proposal, denying its shareholders the opportunity to vote for the transaction. Based on the recent trading activity in Macarthur, Peabody commented that the market recognizes the premium that Peabody was offering.
Looking forward, Peabody is advancing its internal growth projects and continues to pursue other value-added investments to serve high-demand markets.
Read the full analyst report on “BTU”
Zacks Investment Research