ArcelorMittal and US energy group Peabody were forced to go hostile with their A$4.7bn (£3.2bn) bid for Macarthur Coal after the Australian mining group said the offer undervalued the company and was working on attracting a rival offer.
Peabody the largest US coal company, and ArcelorMittal , the world’s top steelmaker, have been courting Macarthur to secure its resources of pulverised coal, a key steelmaking ingredient, but talks collapsed this weekend after the board refused to close the door to rival suitors in exchange for a higher offer price.
In a statement to the Australian Securities Exchange, ArcelorMittal and Peabody said the all-cash offer was worth A$15.50 a share and also offered Macarthur shareholders a dividend of up to 16 cents a share.
“Macarthur was not willing to engage on customary terms even with Peabody and ArcelorMittal’s willingness to improve the price,” said Gregory H Boyce, Peabody’s chairman and chief executive. “We have decided to take this attractive offer directly to Macarthur shareholders to provide them with significant value.”
Macarthur told shareholders earlier in the day to take no action on the bid, while also revealing that it had rebuffed an even higher proposal from the two parties, at A$16 a share, that was conditional to “no-shop and no-talk” obligations with other interested parties.
Instead, the Australian firm demanded for a conditional price increase to A$18 per share if it was backed by 90 per cent of shareholders. This was rejected by the Arcelor and Peabody.
Macarthur added that the representative from its largest shareholder Citic Resources has taken a temporary leave of absence, to avoid any “future actual or potential” conflict of interest, reviving speculation that Citic too may be interested.
ArcelorMittal owns 16 per cent of Macarthur’s shares, second only to Citic, which controls 24 per cent of the company.