Gloucester Coal receives $320 mln bid from Xstrataadmin
Australian coal miner Gloucester Coal Ltd. on Tuesday recommended shareholders accept a A$391 million ($320 million) offer from a subsidiary of Anglo-Swiss miner Xstrata Plc .
Gloucester Coal said the Xstrata Coal offer of A$4.75 a share was at a 33 percent premium to the one-month volume weighted average price of Gloucester Coal shares, and 27 percent above its April 3 closing price of A$3.73.
“The board believes the offer recognises the potential future growth of coal mining operations in the Gloucester Basin and in the board’s opinion represents an excellent outcome for Gloucester Coal shareholders,” Gloucester Chairman Andy Hogendijk said in a statement.
Sydney-based Gloucester Coal produces both coking and thermal coal from its Stratford and Duralie mines in New South Wales. The company produced 1.9 million tonnes of saleable thermal and coking coal in the year ending June 30, 2006 and reported a net profit of A$40.4 million.
China’s massive appetite for coal to fuel its booming economy has significantly tightened the Asian coal market and pushed up benchmark spot thermal coal prices from about $30 in late 2005 to current levels around $55.
It has also stoked interest in Australian coal producers from overseas predators, with Excel Coal being snapped up by U.S. -based Peabody Energy Corp. for $1.5 billion last year.
Analysts have said that Asia’s growing demand for coal would push prices even higher in the coming months.
Xstrata Coal said in a separate statement the acquisition would extend the life of its New South Wales mines and “has good potential to add to the resource and reserve base through near-mine exploration and further resource conversion.”
Xstrata Coal, the world’s largest producer of export thermal coal, has interests in 32 coal mines in Australia, South Africa and Columbia.
The transaction is subject to regulatory, court and shareholder approval, but is expected to be completed by mid-July, said Gloucester Coal. ($1=A$1.22)