The war between Peabody Energy Corporation (BTU) and Australia’s New Hope Corporation for the takeover of Macarthur Coal Limited is in full swing. Peabody Energy again raised its Macarthur bid to $3.8 billion, in response to New Hope’s raised proposal which includes a cash option.
Peabody had initially offered Macarthur $3 billion in cash, raising it to $3.27 billion in a revised bid last week.
However, the bids of both companies are conditioned upon Macarthur calling off a plan to buy smaller rival Gloucester Coal Ltd. and its related transactions with Noble Group.
Peabody’s Latest Offer
Under its new proposal, Peabody offers Macarthur shareholders a cash price of A$16.00 per share valuing Macarthur at A$4.1 billion (US$3.8 billion). Furthermore, Peabody is prepared to offer cash to all Macarthur shareholders and remains willing to provide any, or all, of Macarthur’s three major shareholders with the opportunity to retain their economic interest in Macarthur should they so desire.
In addition, Peabody notified that the proposal will lapse if Macarthur proceeds with the shareholder vote scheduled for April 19, 2010 regarding a takeover of its smaller rival Gloucester Coal.
Peabody’s management believes that the revised proposal is superior to Macarthur’s proposed takeover offer for Gloucester Coal and associated transactions with Noble and other proposals that Macarthur has disclosed. The company expects the new proposal to satisfy Macarthur shareholders.
New Hope’s Offer
Hopeful of reaching an agreement, New Hope had bolstered its previously announced $3.45 billion bid for Macarthur Coal with a cash component. Under New Hope’s revised offer, Macarthur shareholders could opt for 2.7 New Hope shares for every Macarthur share, or A$14.50 in cash – though the cash option was capped at a total payout of A$950 million.
However, Macarthur has rejected New Hope’s revised takeover proposal saying the offer does not represent an adequate premium.
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