Macarthur Coal Caves to Sweetened Bid by Peabody, ArcelorMittal

Macarthur Coal has backed Peabody Energy (NYSE:BTU) and ArcelorMittals (NYSE:MT) sweetened takeover bid that values the Australian company at about A$4.8 billion ($5.2 billion), three years after first opening its books to suitors.

The deals calls for Peabody to buy all outstanding shares of Macarthur for A$16 each, 3% higher than its previous offer. The price represents a premium of 44% on July 11, the day before the proposed offer was initially made public.

Macarthur, which is the worlds biggest producer of pulverized coal, has fallen far from the price it pushed for earlier this month after it fended off four other takeover attempts in three years.

ArcelorMittal first approach Macarthur about a bid in 2008.

The transaction, which comes after the Macarthur board unanimously recommended the deal to shareholders, includes a 16-cent-a-share dividend for a total offer value of A$16.16.

This is a major step forward in our acquisition process, said Peabody chief executive Gregory Boyce. We are pleased to have Macarthur, Peabody and ArcelorMittal moving forward together to urge shareholders to accept this attractive premium.

Under the agreement, Macarthur must cease any talks with potential suitors. If either party wants to leave the deal, they will have to cough up a termination fee of A$48.3 million.

Demand for coal space in Australia has grown substantially in recent years as the markets in Asia become more and more desirable. Paying such a hefty premium for Macarthur shows its suitors are intending to profit greatly from growing demand in emerging Asian countries.