The Peabody offer price of $A1.8 billion cash is in excess of a fourfold increase in value over a period of just over two years. However, Excel’s preliminary net income forecast of $120 million for 2006-07 is well below analysts’ forecast of $160 million.

ABN Amro Australia resource analyst Warren Edney told Bloomberg that Peabody's offer “is not a lot given there's very little in the way of exposure to reasonable growth opportunities in the coal sector in Australia … It will probably end up being a good deal for Peabody”

But Haggerty said Excel did not see it as a profit downgrade. “It’s another financial increase over the current year, which was a substantial increase over the year before, but yes it is lower than a number of the analysts forecast,” he said.

“I can certainly say that there is absolutely no incentive for us to want to sell the company cheaply… we are very satisfied that we are getting full value not only for the assets that are operating – but those that are yet to be fully commissioned.”

Excel Coal stocks climbed fast after US-based Peabody Energy agreed to purchase the company yesterday, subject to shareholder and regulatory approval.

Excel jumped 25c, or 3%, to $A8.65 yesterday afternoon, topping the $A8.50 per share Peabody has offered to pay for the Australian coal producer.

Other Australian coal-mining stocks also jumped after the proposed sale was announced, including Centennial Coal and Macarthur Coal, which rose 25c and 26c respectively.

Haggarty said all of Excel’s development projects, including Millenium, Wilpinjong and Wambo, were on track to be completed, as previously forecast.

“We are looking at what the underlying value of the business is in terms of life-of-mine cash flows … our view is that the offer in front of us captures all of the value of existing operations and all of the growth projects that we have going at the moment.”

Haggarty said all indications were that the takeover would not negatively affect current Australian operations or jobs.

“Peabody have been here [Australia] for a long time … they’re very familiar with the industry in NSW and I wouldn’t expect to see any noticeable change in the way things are done.

“All the indications that we have are that Peabody will continue to develop assets and projects as we have been doing.”

The proposed sale is scheduled to close in the fourth quarter.