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Macarthur says a better takeover bid may emerge

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The Macarthur Coal board has told shareholders to accept a takeover bid by ArcelorMittal and Peabody Energy (PEAMCoal) but says a better alternative bid might still emerge.

Macarthur released its target’s statement on Monday morning to explain its announcement last week that it would back an improved, $16 a share, $4.83 billion joint takeover offer.

The sweetened offer of $16 per share compares to a bid of $15.50 per share in July, rejected by Macarthur as being too low. It remains possible that a higher bid could emerge, with other interested parties such as Anglo American believed to have done due diligence since the initial offer was made.

“Although it remains possible that a superior proposal might be made, none has emerged to date and there can be no assurances that any will emerge,” Macarthur chairman Keith De Lacy said in a statement.

The company warned shareholders that if PEAMCoal’s offer is unsuccessful, and no alternative offer emerges, then Macarthur’s share price will trade below the offer price.

The company’s shares were up four cents at $15.99 on Monday.

Europe’s ArcelorMittal, the world’s largest steelmaker, has a 16 per cent shareholding and as part of PEAMCoal has a 50.01 per cent minimum acceptance condition.

Peabody Energy is a US coal miner.

Macarthur used its target statement to hit back at attacks by PEAMCoal that management was not delivering on key targets. Earnings, growth and production was regularly falling short and an acquisition had failed.

Macarthur blamed the global financial crisis and severe weather, including record high flooding in Queensland for closing mines and hitting targets.

On the Queensland-based coal producer’s share register are China’s state-owned CITIC, with 24.5 per cent, and South Korea’s POSCO, the world’s third-largest steel maker, with about 7 per cent.

Those two companies bought into Macarthur to secure control of their supplies of pulverised coal injection (PCI) coal, used in steel making. Macarthur is the world’s largest supplier.

PEAMCoal’s offer closes on September 27.