BRITAIN’S largest coal mining company UK Coal said yesterday it was assessing a merger approach which would reduce its exposure to “the volatile performance of its deep mines”.
The coal miner emphasised that it hadn’t received a cash offer from its major shareholder or any other party.
It denied reports that John Whittaker’s Peel Holdings – UK Coal’s largest shareholder with a 28.3 per cent stake – had received an approach for its shares. Reports suggested Peel itself was instead working on an approach.
The company said in a statement: “It is emphasised that this proposal is highly conditional and at a very preliminary stage and no view can be expressed as to whether a transaction will result.”
Shares in UK coal soared after the announcement, closing 12.4 per cent higher at 59p.
Its shares have lost almost 30 per cent of their value so far this year on worries over the volatile performance of its deep mines. It has five such projects in the UK including Kellingley in Yorkshire and Thoresby and Welbeck in Nottinghamshire. UK Coal also said that production on the new face at Daw Mill near Coventry will now only start during April, rather than around the end of March.
“The exposure of the group to the volatile performance in its deep mines is a significant concern to the directors and mitigating the effects of this exposure, by operating improvements or structural means, is a priority,” UK Coal said in the statement.
At today’s price the business is valued at just short of £175m. Three years ago it was worth more than £1bn.