US coal giant Peabody Energy is citing the proposed resources super profits tax and the results of due diligence as the reasons for a reduction in its takeover bid for Macarthur Coal.
Peabody reduced its bid for Macarthur to $15 per share today, valuing the company at $3.815 billion, having earlier offered $16 per share, or $4.069 billion.
Since Peabody made its offer of $16 cash per Macarthur share on April 15, Macarthur’s share price has fallen more than 12 per cent, and it closed on Monday at $13.38.
The share price drop came after the federal government announced plans for a resources super profits tax, and a broader downturn in stocks in response to fears related to the Greek debt crisis.
A Peabody spokeswoman said the $16 offer was made in good faith, but was revised in light of Australia’s proposed new tax and after conducting due diligence.
“The definitive proposal delivers a clear, compelling and significant premium for Macarthur shareholders,” Peabody said in a statement.
Peabody made an original bid at $13 per Macarthur share, which was increased to $14 and later to $16.
Patersons Securities analyst Andrew Harrington said it was a highly unusual move for a bidder to reduce the highest offer after it was made.
“I can’t think of any big company examples where someone has come in, increased their bid a couple of times, then made a new bid at a lower level,” Mr Harrington said.
He said shareholders and analysts would now be curious as to what Peabody found in its due diligence that caused it to lower its takeover bid.
As part of the earlier Peabody bid, Macarthur had agreed not to proceed with a complex deal that would have seen it buy out Gloucester Coal, delivering Gloucester’s major shareholder a 24 per cent stake in Macarthur.
Gloucester’s major shareholder, the Noble Group, has since said they are not interested in proceeding with that transaction.
Another takeover suitor, New Hope Corporation, which had offered 2.7 New Hope shares for every Macarthur share, also has seen its share price fall.
Based on New Hope’s closing share price today, its bid would be worth $12.91 per Macarthur share, or $3.282 billion.
Mine Life resources analyst Gavin Wendt said the reduction in the bid would be a major disappointment for Macarthur Coal shareholders.
“The big issue is the resources tax,” Mr Wendt said.
“All of a sudden all the resources companies are theoretically worth less than what they were a couple of weeks ago,” Mr Wendt said.
Macarthur has advised its shareholders take no action in relation to the updated bid from Peabody.
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