While the cash component could be more alluring than the other option of 2.7 New Hope shares for every one Macarthur share, New Hope has capped the total cash for its offer at $950 million.
“Should the cash consideration cap of $950 million be reached, shareholders will be subject to scale-back of their cash consideration and will receive the remainder of their consideration as the scrip alternative,” the company announced yesterday afternoon.
Macarthur’s board has, unsurprisingly, rejected the deal like the previous offers from New Hope and Peabody.
As Noble Group owns 87.8% of Gloucester Coal and could gain almost a quarter of Macarthur through the scrip-based option of the deal, the Hong Kong-based commodities trader has strongly resisted all takeover proposals for Macarthur.
With the shareholder vote for Macarthur’s takeover of Gloucester due on Monday, the rumour mill suggests Xstrata and Peabody are now playing a waiting game.
According to Goldman Sachs JBWere’s afternoon trading report yesterday, there is speculation the two major miners will not lodge further proposals ahead of the vote.
“A vote against the Noble deal avoids legal issues on comparing the various offers for the Macarthur board,” Goldman said, citing “street talk”.
Leading Macarthur stakeholder CITIC Resources said it was supportive of the Gloucester transaction but “reserves the right to vote its 22.4% shareholding at the EGM in any manner that it determines in its absolute discretion”
Steelmakers ArcelorMittal and POSCO are also uncommitted, but Mine Life senior resources analyst Gavin Wendt expects them to be more interested in the security of metallurgical coal supply than profits from Macarthur shares.
He does not expect a successful takeover of Macarthur to be valued less than $20 a share.
CITIC, Arcelor and POSCO collectively own 47.4% of Macarthur.
All takeover offers for Macarthur so far require the Gloucester transaction to not proceed.
If its takeover of Gloucester proceeds, Macarthur will control not only its operating Coppabella and Moorvale mines in Queensland’s Bowen Basin but also Gloucester’s Stratford and Duralie mines in the Gloucester Basin of New South Wales.
Macarthur also seeks to gain Noble’s stake in the Middlemount Coal joint venture under the Gloucester offer, with the Queensland company intending to kick off the stage 2 expansion of the mine in mid-2011.
Production capacity at the coking and pulverised coal injection coal mine is expected to double to 3.6 million tonnes per annum for the first year before reaching 5.4Mtpa for the next 19 years.
Macarthur’s run-of-mine production reached 5.79Mt in 2009 from its Coppabella and Moorvale mines, while Gloucester’s total ROM production was 1.51Mt.
Back in January, Macquarie Research analysts forecast Noble would eventually launch a full takeover play for Macarthur.
Macarthur shares were down 2.8% to $15.50 yesterday.
