A decision by Anglo American surrounding its Queensland-based coal assets is said to be imminent, a week on from when final bids were due.
After final bids were due on November 13, it’s been radio silence on the outcome of the auction. One explanation could be that suitors in the final mix moved into a further “black box due diligence” phase, which can occur in the final stage of an auction to determine whether a party can improve their offer based on more sensitive financial information.
Usually, this is only provided to one or two parties at the very end of an auction.
The understanding is the deal is shaping up to be one where the business is sold as a whole rather than a break up scenario.
The value of the assets is believed to be more than $US2bn and there were thought to be three groups that put forward final bids, with Glencore out of the final stage of the race.
China’s Yancoal, a consortium led by Stanmore Coal and Peabody Energy were thought to be the three bidders.
Yancoal is the favourite on price, but did not have the final sign-off from the Chinese government as of last week.
Peabody is apparently motivated to do deals again after recovering from Chapter 11 bankruptcy some time ago, but the question is whether it has the financial firepower.
And the Stanmore Coal consortium backed by Indonesian investor Golden Energy Resources takes a conservative approach on price and GEAR has already purchased South32’s Illawarra Coal for $2.5bn this year.
Selling the coal assets has been a defensive move by Anglo American which may see its share price re-rate and make a buyout for BHP more difficult without paying a high price after the mining giant made a play for Anglo American this year.
Already, Brisbane billionaire Sam Chong exercised his option to buy the remaining stake in two coal mines ahead of other suitors in the portfolio, outlaying $1.6bn for the 33.3 per cent stake he did not already own in the Jellinbah East and Lake Vermont metallurgical coal mines.
Working for Anglo is Goldman Sachs and Morgan Stanley.
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