ArcelorMittal and Peabody Energy on Monday jointly launched a hostile bid for Australian firm Macarthur Coal,after the target company refused to accept their AUD 4.7 billion ($5.3 billion) takeover bid. The Peabody-ArcelorMittal combine has offered a bid of AUD 15.50 per share plus a dividend of 16 cents per share,following the rejection of their conditional offer for an increase to AUD 16 per share by the Australian miner's Board. In a filing to the Australian Stock Exchange,Macarthur advised its shareholders not to take any action and termed the offer as opportunistic. The company further said that it is in talks with number of parties that may result in a superior offer. The BidCo (Peabody-ArcelorMittal combine) offer appears to be an opportunistic attempt to acquire Macarthur at a time of global economic volatility and regulatory uncertainty in Australia,and fails to reflect Macarthur's industry leading position and the growth potential of its unique assets, Macarthur chairman Keith DeLacy said. However,the Peabody-ArcelorMittal combine maintained that it is a "compelling offer to the Macarthur shareholders and is offered at a 41 per cent premium to the closing price of AUD 11.08 per share on July 11,when the bid was made public. We are making an attractive offer directly to shareholders,which represents a 41 per cent premium to the closing price immediately before our approach was disclosed to the market, ArcelorMittal's CFO Aditya Mittal said in a joint statement. Peabody's Chairman and CEO,Gregory H Boyce said,Peabody and ArcelorMittal believe our bid is compelling and we have decided to take this attractive offer directly to Macarthur shareholders to provide them with significant value. ArcelorMittal,with a 16 per cent shares of Macarthur,is already the second largest shareholder of the company,while Chinese investment fund,CITIC is the largest shareholder,having a 24.3 per cent stake in the company. Another steel giant,POSCO owns 7 per cent in Macarthur. The joint statement of Peabody-ArcelorMittal added that the bidder's statement would be lodged shortly and will be sent to shareholders about two weeks later. Earlier,the Peabody-ArcelorMittal combine had agreed to increase their initial offer of AUD 15.50 per share made on July 11 during the due-diligence process,subject to the condition of Macarthur not to be talking to other potential bidders. However,the Queensland-based Macarthur rejected the bid,so that it can keep the channel open for other potential suitors. The company added that while there can be no assurance that a superior proposal will emerge,Macarthur's directors consider it is clearly in shareholders' interests to do all that they can to facilitate this. Macarthur is the world's largest producer of (seaborne) low volatile pulverised coal used as low-cost input for steel making and exports its entire product around the globe. It operates two mines in Queensland's Bowen Basin and plans to double its 2009 production capacity by 2014. The company has also given a temporary leave of absence for three months to the Board representative of CITIC,its largest shareholder,to avoid any future actual or potential conflict of interest and to enable CITIC Group to consider the offer. This move also gave rise to speculations that the Chinese firm too may be interested for Macarthur.
