Anglo American Said to Weigh Counterbid for Macarthur Coal

Anglo American Plc is exploring a bid for Macarthur Coal Ltd. that would challenge Peabody Energy Corp.’s A$4.7 billion ($4.9 billion) offer for the Australian miner, said two people with knowledge of the matter.

Anglo American, part owner of the world’s biggest platinum and diamond producers, is studying Macarthur’s finances, said one of the people, who declined to be identified as the talks are private.

Buying Brisbane-based Macarthur would give Anglo steelmaking-coal mines in Australia as prices trade near a record. Peabody and its bidding partner, ArcelorMittal, took their offer directly to Macarthur shareholders after talks with the board collapsed.

“Acquisition of metallurgical coal fits with Anglo’s strategy,” Peter Davey, London-based head of metals and mining research at Standard Bank Group Ltd., said by telephone. “They have the firepower because they were a bit stingy on dividends. Maybe they kept the money for this instance potentially.”

Anglo American doesn’t comment on speculation, said Emily Blyth, a London-based spokeswoman. She also said the company “does examine growth opportunities in our core commodity groups across geographies.” Calls to Macarthur today weren't answered.

Macarthur rose 48 cents, or 3.1 percent, to $16.15 in U.S. over-the-counter trading as of 5:20 p.m. New York time. Its Australian stock fell 18 cents to A$15.32 in Sydney earlier today.

Offer Snubbed

Peabody, based in St. Louis, and ArcelorMittal are bidding A$15.50 a share. Macarthur directors had snubbed that offer earlier, demanding A$18.

ArcelorMittal, based in Luxembourg, is Macarthur’s second-biggest shareholder, with about 16 percent. Brokers including RBS Morgans Ltd. have said a rival bid may include Macarthur’s largest investor, Citic Group. Citic is receiving advice from Macquarie Group Ltd., said one person familiar with the matter.

If successful, the Peabody group’s bid for Macarthur would be the second-largest coal takeover this year, second only to Alpha Natural Resources Inc.’s $7.1 billion purchase of Massey Energy Co. in June. This year has yielded almost 50 coal transactions globally, with a combined value of more than $20 billion.

“We will see more of these kind of deals because large-cap companies like BHP Billiton, Anglo have a lot of cash,” Davey said. “The recent shake-out in the market is bringing a lot of opportunities for housekeeping in terms of buying out minorities.”

Anglo American announced an interim dividend of 28 cents a share on July 29. That compares with interim dividends of 25 cents last year and 44 cents in 2008. It didn’t offer any dividend in 2009 during the global financial crisis.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE