Australian magnate Tinkler drops Whitehaven Coal takeover bid

Whitehaven Coal Ltd (WHC) said Australian mining magnate Nathan Tinkler's scrapping of his takeover proposal valuing the company at A$5.3 billion ($5.5 billion), had led to the biggest drop in its shares in over a year year.

Whitehaven was advised that a ''formal binding proposal of A$5.20 a share will not be forthcoming,'' according to the Sydney-based company's statement released today. The shares had traded under the offer price since a group led by Tinkler, Whitehaven's biggest shareholder, made the conditional cash bid on 13 July.

Tinkler, an electrician-turned-miner, had been in talks to raise funds for the acquisition of Whitehaven, owner of seven coal assets, as coal prices retreated and banks tightened lending. The deal, the biggest announced in Australia this year, according to data compiled by Bloomberg, came unstuck with resources minister Martin Ferguson calling an end to the nation's mining boom.

According to analysts, Tinkler would have had great difficulty raising the finance, which was understandable given what was happening in commodity and financial markets, with even parties who normally backed him, concerned given the outlook for the coal markets.

Whitehaven shares were down 11 per cent to A$3.09 at the close in Sydney, the biggest drop since 16 May, 2011. The company, which today reported a 13-per cent drop in underlying profit, said 13 June, it had rejected an unconditional offer from Tinkler that did not disclose terms.

Thermal coal at the Australian port of Newcastle, the benchmark price for Asia, slid 17 per cent in the three months to 30 June, the worst quarter since 2009, according to IHS McCloskey, a coal-data provider and Queensland coking coal prices dropped 17 per cent since the announcement of the offer, according to Energy Publishing Inc.