The companies believe that infrastructure optimisation could deliver the companies up to $205 million in savings. The merger would utilise Gloucester’s excess port capacity to meet capacity shortfalls and realise opportunities to accelerate project development.
There would also be logistics savings and benefits through access to a greater number of load points and a larger stockpile capacity, they said in their merger presentation.
Coal blending would contribute up to $30 million of synergies. The merger would create greater access to coal with complementary qualities for blending due to the merged group’s larger and broader suite of both thermal and metallurgical coal products.
Corporate savings, tax and procurement savings would be in the order of $145 million with the elimination of duplicated corporate costs, tax base reset for certain Gloucester assets, and cost savings from the utilisation of the merged group’s stronger bargaining position and larger buying power.
The companies believe there are a number of areas identified as having potential substantial benefits to the merged group that have not been able to be quantified.
These include combined marketing benefits, equipment and knowledge sharing, improved buying power for capital equipment, maintenance and inventory efficiencies and lower borrowing costs.
The merger is to be effected by scheme of arrangement between Gloucester and its ordinary shareholders under which Yancoal will acquire Gloucester for Yancoal shares, with Yancoal to list on the Australian Securities Exchange as MergeCo.
Gloucester shareholders will meet to vote on the merger scheme and capital reduction on June 4 ahead of its planned implementation date of July 3.