New Hope Rises to Record After Saying It’s Considering Takeover Approaches
New Hope Corp. rose to a record in Sydney trading after the Australian coal producer valued at A$5.1 billion ($4.9 billion) received takeover offers from unidentified companies.
New Hope, which operates the Acland coal mine in Queensland state, climbed 15 percent to close at A$6.10 at 4:10 p.m. in Sydney, the highest since Sept. 16, 2003. Selected groups will be invited to submit offers in a process that is likely to take months, the company said in a statement.
Buying New Hope, based in Ipswich, Queensland, would give an acquirer thermal coal mines and an export terminal. Prices for thermal coal, used to produce electricity, are likely to rise over the next two years, supported by demand in Asia, Credit Suisse Group AG said in note dated yesterday.
Acland produces a “high quality thermal coal product that’s in high demand,” said Peter Arden, senior equity analyst at Ord Minnett Ltd. in Melbourne. The quality of New Hope’s assets combined with the company’s plans to double output may attract suitors including BHP Billiton Ltd. (BHP), Rio Tinto Group and Xstrata Plc (XTA) as well as Japanese power producers, Arden said.
The company has received “numerous” approaches from potential buyers, Chairman Robert Millner said today in a telephone interview, declining to identify them. New Hope isn’t currently in talks with any of them, he said.
Kelly Quirke, a spokeswoman for BHP, and Karen Halbert, a Melbourne-based spokeswoman for Rio Tinto, declined to comment. James Rickards, a Sydney-based spokesman for Xstrata’s coal division, also declined to comment.
New Hope’s expansion plans, strong balance sheet and ownership of an export facility means the company is worth more than A$7 a share, implying a value of more than A$5.8 billion, Angus Aitken, a broker with Bell Potter Securities Ltd. said in an e-mailed comment.
This year has yielded coal transactions with a combined value of $33 billion, compared with $38 billion last year, according to data compiled by Bloomberg. The average premium paid this year is 23 percent, according to the data.
The Acland coal mine may be worth about A$3 billion, Ord Minnett’s Arden said. The company, planning to double output at the mine to 10 million metric tons, held A$1.7 billion in cash and near-cash items as of June 30.
New Hope appointed Pitt Capital Partners as financial advisers and Baker & McKenzie as legal advisers.
To contact the reporter on this story: Elisabeth Behrmann in Sydney at firstname.lastname@example.org