Macarthur Continues Search For Bids; Peabody Offer Not Considered Hostile

Australia's Macarthur Coal, the world's largest maker of pulverized coal, is continuing its search for alternative takeover offers to the $5.2 billion offered by a joint venture formed by Peabody Energy BTU and Arcelor Mittal MT, adding that it does not consider the offer from the two companies to be hostile. On Monday, Peabody, the largest U.S. coal producer, and ArcelorMittal, the world's largest steelmaker, took their offer of about $17 a share directly to Macarthur shareholders. The Australian company is apparently seeking an offer in the neighborhood of $19.80 a share. ArcelorMittal is already Macarthur's second-largest shareholder, but China's Citic Group owns 24% of Macarthur and has been rumored to be mulling a bid for the Aussie coal producer, though no offer has materialized. Citic is Macarthur's largest shareholder. Peabody and ArcelorMittal are willing to pay the equivalent of $27 for each ton of Macarthur's coal reserves and $3 a ton of its coal resources, Bloomberg News reported, citing a Morgan Stanley report. The Australian company makes for an attractive takeover target due to Australia's proximity to China, India and other emerging markets where coal for steel production is in high demand. Macarthur said today it is looking at other potential offers without mentioning specifics. Last month, the Australian Financial review reported Canada's Teck Resources and Anglo American could be bidders for Macarthur, Bloomberg reported. Rio Tinto RIO, the world's third-largest mining company, and Yanzhou Coal YZC, China's fourth-largest coal company, have also been rumored to be interested in Macarthur. Yanzhou has made an Australian acquisition in recent with the $3.2 billion purchase of Felix Resources in 2009. If Peabody and ArcelorMittal are successful in acquiring Macarthur, it would represent the second-largest deal in the coal sector this year behind the $7.1 billion Alpha Natural Resources ANR paid for Massey Energy.