Macarthur rejects Peabody, Arcelor bid

On Monday, August 1 Peabody Energy Corp. and ArcelorMittal went hostile with a takeover bid for Macarthur Coal Ltd valued at AUD 4.7 billion, after failing to persuade the Australia-based company’s board to halt talks with rival suitors in exchange for a higher offer price.
In a statement to the Australian Securities Exchange, Peabody and ArcelorMittal said their cash offer is worth AUD 15.50 a share. It also said Macarthur’s shareholders of record as of June 30 would be eligible for a dividend of up to AUD 0.16 a share. Earlier Monday, Macarthur told shareholders to take no action on the Peabody-Macarthur bid, while at the same time revealing it had rejected an even higher proposal from the two, at AUD 16 a share that was conditional on it not holding talks with other potential suitors.

In response to the earlier higher proposal, Macarthur said it would be prepared to accept revised bid terms that could lead to it being valued at up to AUD 5.68 billion. The higher valuation would be triggered when Peabody and ArcelorMittal secured over 90% of the company, as Macarthur would require them to raise their offer to AUD 18 a share at that point “to reflect the significant synergy, tax and other benefits potentially available to an acquirer.”

Peabody and ArcelorMittal confirmed they had been willing to offer a higher price if they could agree to terms with Macarthur’s board. Macarthur, which is targeting annual coal output of 9.2 million metric tons by fiscal year 2014, said it is talking to several parties over possible offers that would compete with the Peabody-ArcelorMittal proposal.