U.S. coal giant Peabody Energy Corp. extended its bid of $5-billion Australian ($5.2-billion Canadian) for Australia’s Macarthur Coal Ltd. by two weeks after failing to reach the 90-per-cent threshold for acceptances by its Friday deadline.
The per-share bid of $16 (Australian) will now expire Nov. 25, Peabody said in a statement in Sydney. The offer rises to $16.25 if more than 90 per cent of Macarthur’s shares are tendered.
According to a notice from Macarthur Friday morning, Peabody has gained about 85 per cent of shareholder acceptance.
South Korean steel maker Posco, which owns a 7.25-per-cent stake, is the last remaining major holdout after major shareholder China’s Citic accepted the bid in October.
St. Louis-based Peabody gave no further explanation and a company spokesman did not immediately respond to a request for more information.
Analyst Bill Burns, of Johnson Rice & Co., said he did not interpret the extension as a red flag, or a signal that the deal was in jeopardy.
“They basically want a majority stake and if they get 90 per cent, they will have to pay a higher price,” he said.
“They were able to easily raise money,” he said, noting that Peabody sold $3.1-billion of senior notes this week in a private placement market.
Peabody said it intends to use the net proceeds from the sale of the notes, together with other sources of financing, to fund the Macarthur acquisition.
Peabody’s former partner in the bid, ArcelorMittal, last month pulled out of the deal as a global equities rout hit coal stocks and made the Macarthur premium harder to justify.
The acquisition of Macarthur will give it control of the world’s top producer of pulverized coal, at a time when demand for steel-making materials holds up in Australia’s key coal market, China.