Last week, Peabody had lowered its takeover bid for Macarthur to AUD15 per share in cash, down from a prior offer of AUD16 per share. The US coal producer said that the proposal followed its due diligence and the introduction of the Australian resources profit tax proposal.
Peabody was also willing to provide any or all of Macarthur’s three major shareholders (CITIC, ArcelorMittal and POSCO) the opportunity to retain their economic interest in Macarthur had they chosen to do so.
After the Macarthur board meeting for considering Peabody’s revised bid, the board formed the view that based on the price and the conditions of the proposal, it cannot reasonably be recommended to shareholders.
In addition, the Macarthur Board has also consulted with its two largest shareholders and based on feedback received, considers that a scheme of arrangement in the form proposed (which requires the approval of 75% of shares voted and 50% of shareholders voting at a scheme meeting) is unlikely to be approved.
In particular, Macarthur has received the following advice from CITIC (its largest shareholder with a 22.4% interest in Macarthur) in relation to that proposal: “CITIC does not find the (Peabody Further Proposal) attractive. CITIC believes that the long-term strategic value of Macarthur Coal exceeds by a significant margin the cash offer price contained in (Peabody’s Further Proposal).
“Furthermore, the terms of the shareholders agreement to govern a privatised Macarthur Coal will be critical in any assessment by CITIC. The proposed terms of a shareholder agreement tabled by Peabody in March 2010 are not acceptable to CITIC.”
Peabody Energy expressed disappointment that the board of Macarthur Coal has turned down its proposal for the purchase of Macarthur, denying its shareholders the opportunity to vote for the transaction.
