The board of Centennial Coal this morning unanimously recommended a complete takeover bid by Thai energy company Banpu.
Banpu will acquire the remaining 80.1% of the Hunter Valley coal miner that it does not already hold for $6.20 per share.
The offer represents a 40% premium on the company’s closing price last Friday, 2 July of $4.42 per share.
It also represents a 55% premium to the closing price of $3.99 per share on 5 May this year, when Banpu announced it had acquired 14.9% in the company.
“The Centennial board has carefully considered the offer and unanimously recommends it to shareholders in the absence of a superior proposal and subject to an independent expert finding that it is fair and reasonable,” the miner said in a statement.
The company has entered into a Bid Implementation Agreement (BIA) with Banpu, which grants exclusivity to the Thai company.
The BIA is subject to several conditions, including a 50.1% minimum acceptance of the offer and at least 75% of Banpu shareholders approving the deal.
The entire Centennial board intends to take up the offer.
“The offer price of $6.20 cash per share delivers compelling value to shareholders and represents an attractive premium to the recent Centennial share price,” the company’s chairman Dr Ken Moss said.
According to Centennial managing director Bob Cameron, the company is well-placed to take advantage of the strong demand for thermal coal that will emerge when several long-term domestic contracts expire in the coming years.
“We also expect to grow production as a result of our new operations at Airly and the Newstan Lochiel project,” he said.
“Banpu’s offer recognises both the current profitability of Centennial and its upside.
“I am pleased to confirm Banpu has indicated its high regard for our personnel and its intention to maintain current operations and employees.”
The board will provide shareholders with an independent expert’s report along with its target’s statement.