Peabody Energy and ArcelorMittal have offered Macarthur Coal Ltd an all-cash off-market takeover bid to acquire all the shares. The offer includes giving Macarthur shareholders will A$15.50 cash per share, which translates into an equity value of Macarthur at approximately A$4.7 billion. Also, the deal allows Macarthur shareholders “to retain any final dividend declared by Macarthur in respect of the financial year ended June 30, 2011, up to an amount of 16 cents per share, without reducing the offer price. This represents a total value of A$15.66 cash per share.”

However, negotiations have been difficult as a bid implementation agreement (BIA) with Macarthur has been rejected. Then, a formal offer seeking a recommendation submitted to the Macarthur board was declined.

Thus, Peabody and ArcelorMittal have decided to take matters into their own hands and go directly to the Macarthur shareholders, urging them to consider and take the deal.

Aditya Mittal, CFO and Member of the Group Management Board of ArcelorMittal said, “We are making an attractive offer directly to shareholders, which represents a 41% premium to the closing price immediately before our approach was disclosed to the market.”

Macarthur would be an asset to Peabody Australia, while helping expand ArcelorMittal's mining interests Australia if the deal was settled. The joint operation between these two potential buyers, PEAMCoal Pty Ltd, will split ownership 60% by Peabody and 40% by ArcelorMittal. Already, PEAMCoal has a relevant interest of 16.1% in Macarthur’s shares.

While ArcelorMittal and Peabody wait for the regular approvals, the companies’ press release said they “expect to lodge the Bidder’s Statement in relation to the offer with the Australian Securities and Investments Commission (“ASIC”) shortly. The Bidder’s Statement will set out in detail why Macarthur shareholders should accept the offer and will be dispatched to Macarthur shareholders approximately two weeks after its lodgement with ASIC.”

Source: Peabody Energy & ArcelorMittal