Peabody bids for Macarthur Coal

Peabody Energy has offered to buy Macarthur Coal for almost $5 billion; one day after the announcement of the carbon tax put coalmining at risk throughout Australia.

The United States mining giant lowered its initial bid for the Queensland company in 2010, when then-Prime Minister Kevin Rudd was attempting to introduce the resource super-profits tax.

The latest bid of $4.7 billion amounts to $15.50 per Macarthur share and is a joint bid from Peabody and Macarthur’s 16 per cent shareholder ArcelorMittal.

It has a 50.01 per cent acceptance condition does not eliminate the possibility of rejection by two major shareholders, China’s CITIC Group and Posco, the Korean steel company.

"Shareholders are advised that the indicative proposal is not a binding offer and is not capable of acceptance," Macarthur said in an ASX announcement yesterday.

Following the announcement of the carbon $23 per tonne carbon tax on Sunday, the Australian coal mining industry has been up in arms about jobs losses and mine closures across the sector.

Australian coal association chief executive Ralph Hillman told The Australian the carbon tax doesn’t change the fact Macarthur is a good asset

He also questioned whether the federal government’s proposed tax would actually be introduced.

"I’ve become very cynical about the carbon tax because, if you remember CPRS in 2009, it’s got a long way to go before it gets up, and even if it does get up, how long is it going to last?

"Investors take a punt on things and I’d say people are punting this isn’t going to go (ahead)," he said.

Discussions between the parties opened on Sunday.

The proposal will need approval from the Foreign Investment Review Board and proven satisfactory due diligence.

"The board makes no recommendation in relation to the indicative proposal but will seek to engage with Peabody and ArcelorMittal in relation to the price and terms," Macarthur said.

Image: Macarthur Coal

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