Whitehaven Coal Ltd., the Australian coal producer valued at A$4 billion ($4 billion), rejected a takeover approach from largest shareholder Nathan Tinkler, saying it was too conditional.
The company received the non-binding proposal from Tinkler Group Pty late yesterday, Sydney-based Whitehaven said today in a statement. The company added that there was a possibility a “more complete” proposal would emerge and established a committee of directors to respond to any future offers.
The bid came after Whitehaven’s shares plunged 30 percent since the company agreed to buy Tinkler’s Aston Resources Ltd. in December. That deal made 36-year-old Tinkler the company’s largest shareholder in the coal producer whose main assets are in the Gunnedah Basin in New South Wales state.
“Like most resource stocks Whitehaven’s share price has been dealt with very harshly by the market that’s unrelated to its fundamentals,” Andrew Pedler, an analyst at Wilson HTM Investment Group, said by phone from Brisbane. “Whitehaven is significantly undervalued and shareholders would be doing themselves injustice to sell out at this price.”
The stock, which will resume trading at 11 a.m. in Sydney, climbed 2.8 percent to A$4 yesterday. It has fallen 28 percent in the past year, compared with an 11 percent drop in the benchmark S&P/ASX 200 Index. Pedler has a “buy” rating on Whitehaven with a price target of A$7.21.
“The proposal is highly conditional and incomplete and is not considered capable of being progressed at this time,” Whitehaven said in today’s statement.
Tinkler, who has moved to Singapore this year, said in an interview last year after completing the Aston sale that he was planning more coal mergers and acquisitions.
Tinkler and his companies also own coal and metals mining projects, infrastructure investments, a horse-breeding operation, and the Newcastle Knights, a rugby league team in the Australian coal port of Newcastle.