New Hope sweetens Macarthur Coal bid with new $822.9-million cash option

After a brief lull, New Hope has returned to the complex takeover battle for Macarthur Coal by including a cash option of $822.9 million to its earlier all stock $3.44 billion offer.

The revised proposal came after the board of Macarthur Coal had rejected its proposal three days ago saying that the scrip ratio of 2.7 New Hope shares for every Macarthur share did not represent an adequate premium for control of the company, and the proposal consists of a scrip offer with no cash alternative.

Analysts had also said that New Hope could not hope to make the acquisition without a cash offer, especially since the bid by its rival for the acquisition, US coal miner Peabody Energy's A$3.6-billion was rejected by Macarthur in favour of sticking to its plan of taking over its smaller domestic rival Gloucester Coal and an asset acquisition deal with Noble. (See: Macarthur Coal rejects Peabody Energy's sweetened $3.27 billion takeover offer)

New Hope said it decided to add the cash alternative after it held talks with Macarthur shareholders.

Queensland-based New Hope said today in a statement that its flexible offer structure allows Macarthur shareholders to choose either cash (up to the A$950 million cap) or shares as consideration, which is a highly attractive premium for their shares and its new revised offer remains superior to the proposed Gloucester deal.

But yesterday, the Brisbane-based Macarthur said that China's Citic Resources Holdings, which holds a 22.4-per cent stake in the company said that Citic supports its deal with Gloucester Coal. However, it has made no decision as to how it will vote on the resolution at the EGM scheduled for 19 April 2010.

Last week, Macarthur had postponed the EGM scheduled for 12 April 2010 by a week to Monday 19 April 2010 after it learnt that Swiss miner Xstrata, the world's largest exporter of thermal coal, was mulling a bid for it and had approached one of its major shareholders for support. (See: Macarthur Coal becomes hot property as more buyers enter fray)

Macarthur is Australia's second-biggest coal miner and supplier of low volatile pulverised injection coal to steel mills in Asia, Europe and Brazil through its 73.3 per cent stake in Coppabella Mine and Moorvale Mine and a 74.66 per cent stake in the Middlemount Mine project.