ArcelorMittal, Peabody Energy bid $5 billion for Australia's Macarthur Coal

ArcelorMittal, the world's largest steelmaker has teamed up with Peabody Energy, the world's largest private-sector coal company to acquire Australia's Macarthur Coal, the world's biggest producer of pulverised coal, for $5 billion in cash.

With demand for the raw material need for making increasing, ArcelorMittal, which holds 16.2-per cent stake in Macarthur, and Peabody have offered A$15.50 a share, a premium of 40 per cent to today's closing price of Brisbane-based Macarthur, Australia's second-biggest coal miner and supplier of low volatile pulverised injection coal to steel mills in Asia, Europe and Brazil.

The bid comes after Macarthur rejected a sweetened $3.27-billion unsolicited takeover bid from Peabody in April last year. After sweetening its bid to $3.8 billion a few days later, talks collapsed after Peabody reduced its offer when the Australian centre-left Labor government slapped mining tax on the coal and iron ore mining industry (See: Proposed Australian tax leads to Macarthur's rejection of Peabody's lowered bid).

Macarthur's major shareholders collectively hold around 47 per cent of the company's stock, with China's Citic Resources Holdings holding 22.4 per cent, ArcelorMittal holds 16.6 per cent and South Korea's steel maker Posco holds 8.3 per cent.

Citic Resources, the largest shareholder of Macarthur, said it would study the offer.

"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 in a statement.