Peabody, ArcelorMittal Edge Closer to Macarthur Takeover

Peabody (NYSE:BTU) and ArcelorMittal (NYSE:MT) stepped closer to clinching a majority share of Macarthur Coal on Friday after they secured backing from the Australian pulverized-coal miner’s largest shareholder.

Citic Group, a Chinese state-owned investment group that holds the largest stake in Macarthur at 25.2%, said it would accept the offer within the next 24 hours. That deal would value Macarthur at $5 billion.

The acceptances take PEAMCoal’s ownership, which is the body formed by Peabody and Arcelor for the purpose of this acquisition, to 49%. It needs to have 50.01% of the company to obtain control of Macarthur.

"We are pleased that these shareholders have decided to accept our offer, which delivers full value to Macarthur shareholders," Peabody CEO Gregory Boyce said in a statement released Friday.

The companies said they would raise the current bid of $16 Australian a share to $16.25 a share if their stake rises to 90% by Nov. 11. That would allow the joint venture to compulsorily acquire the remaining shares of Macarthur under takeover laws in Australia.

“With the latest positive developments, we now urge all Macarthur shareholders to accept our offer as soon as possible, in order to maximize their chances of receiving the increased offer price," said Aditya Mittal, ArcelorMittal’s chief financial officer.

Demand for coal space in Australia has grown substantially in recent years as emerging markets in Asia become more desirable for industrial growth.