Macarthur Coal rejects Peabody Energy's sweetened $3.27 billion takeover offer

Australia's Macarthur Coal has rejected a sweetened $3.27 billion unsolicited takeover bid by US coal miner Peabody Energy, the world's largest private-sector coal company.

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, said today that its board rejected Peabody's offer since it undervalued the company.

It also noted that the highly conditional and uncertain nature of the revised indicative proposal means that it can have no reasonable confidence of the proposal being ultimately put to shareholders as an offer.

Macarthur also said that it would go ahead and seek shareholders approval at the scheduled 12 April meeting for its plan to take over its smaller domestic rival Gloucester Coal.

St. Louis, Missouri-based Peabody Energy had 9.0 billion tonnes of proven and probable coal reserves as of 31 December 2009 and revenues of $5.4 billion in 2009.

The company had, last week, made an unsolicited $3 billion bid for Macarthur on condition that the Perth-based miner not proceed with its proposed $765 million acquisition of Gloucester Coal, a company controlled by the Hong Kong-based commodities trader Noble Group.