Peabody and ArcelorMittal have formed a new company, PEAMCoal, which is offering $A15.50 per Macarthur Coal share plus a final 16c dividend, valuing the company at $4.7 billion.

In its bidder’s statement released yesterday PEAMCoal took aim at Macarthur’s ''persistently falling short of earnings and growth targets''.

In its letter accompanying the bidder’s statement Peabody chief executive officer Gregory Boyce and ArcelorMittal chief financial officer Aditya Mittal urged shareholders to accept their offer, which they said represented “outstanding value”.

“Quite simply, we believe it offers you greater value than Macarthur has to date been able to deliver,” they said.

The bidder’s statement lists in detail what the bidders see as Macarthur management’s shortcomings.

''Macarthur has fallen short of its original production guidance for four of the past five years; ongoing delays reaching first large-scale production from Middlemount, which Macarthur originally planned for late 2009 but is now expected in 2012; downgrades to core earnings and production forecasts during financial year 2011; selection of the fourth mine [Codrilla] announced five months behind schedule in May 2011 and failure to complete the acquisition of mining lease MDL162 [in Queensland’s Bowen Basin] as planned.''

PEAMCoal also highlighted the fact that Macarthur had earlier indicated it would convert a $360 million loan into equity in the proposed MDL162 project, but failed to do so, leaving shareholders with the risk the loan might not be repaid.

Macarthur also faced outstanding litigation with possible damages of $1.2 billion over a dispute relating to the Monto Coal venture, PEAMCoal said.

Macarthur chief executive officer Nicole Hollows previously said she would be talking to interesting parties who were prepared to make a higher bid. Analysts believe $18 per share is the likely price to sway the Macarthur board.

The Macarthur board advised shareholders that there is no need to take any action at this time in relation to the PEAMCoal offer.

It also noted the Macarthur share price had remained consistently above PEAMCoal’s offer price of $15.50 per share since the offer was announced on August 1, 2011 and that the PEAMCoal Offer was conditional, required various regulatory approvals and was not stated to be “final” in any respect.

While a superior offer from an alternative interested party cannot be assured, “Macarthur is in continuing discussions with other interested parties”