Miner Macarthur rejects $5.2 billion takeover bid

August 1, 2011 - 8:14 AM

SYDNEY (AP) — Australian miner Macarthur Coal Ltd. on Monday rejected a $5.2 billion takeover bid by U.S energy giant Peabody Energy Corp. and steelmaker ArcelorMittal as "opportunistic."

The Macarthur board said in a statement it had advised its shareholders to take no action on the 4.7 billion Australian dollar ($5.2 billion) takeover offer, which values the coal miner at AU$15.50 a share.

Macarthur, one of the world's largest producers of pulverized coal coveted by steelmakers, said it had told St. Louis-based Peabody and Luxembourg-based ArcelorMittal that it would recommend a AU$16 a share offer, based on certain conditions.

Those would include a price increase to AU$18 per share if the companies gained 90 percent of Macarthur and the payment of a special dividend of up to 98 Australian cents per share.

The offer "appears to be an opportunistic attempt to acquire Macarthur at a time of global economic volatility and regulatory uncertainty in Australia and fails to reflect Macarthur's industry leading position and the growth potential of its unique assets," Macarthur Chairman Keith DeLacy said in a statement.

The parties could not agree on conditions for a AU$16 a share bid, with Macarthur accusing the suitors of imposing unreasonable restrictions.

They included "no-talk" limitations restricting Macarthur's ability to talk to potential buyers that might offer a superior proposal.

"While there can be no assurance that a superior proposal will emerge, Macarthur's directors consider it is clearly in shareholder's interests to do all that they can to facilitate this," Macarthur said.

But Peabody told Macarthur shareholders they are being offered a 45 percent premium to the miner's recent average stock value.

"We have decided to take this offer directly to Macarthur shareholders to provide them with significant value," said Peabody chairman and CEO Gregory H. Boyce.

ArcelorMittal, the world's largest steelmaking company which already holds a 16 percent stake in Macarthur, and Peabody, the world's biggest private-sector coal producer, made their takeover bid for Macarthur three weeks ago. That was a day after the Australian government released details of its proposed carbon tax, which the mining industry fears will make some Australian coal mines financially unviable.

Macarthur shares rose almost 2 percent to close at AU$15.78 on Monday after its announcement.

Macarthur has roughly 270 million tons in total coal reserves and forecasts production of 3.8 million to 4 million tons for the fiscal year that ends June 30.