Peabody Energy pays up to $US3.8bn for Anglo American steel making coal assets
US-listed Peabody Energy has won the competition to buy Anglo American’s Australian steel making coal mines, outlaying up to $US3.8bn for the assets.
The US-listed Peabody Energy has won the competition to buy Anglo American’s Australian steel making coal mines, paying up to $US3.8bn ($5.8bn), in a deal that strengthens Anglo’s balance sheet amid the potential return of spurned takeover suitor BHP.
Peabody beat the final competitors Yancoal and Stanmore Coal in the race, with the London and Johannesburg-listed miner choosing a winner at the weekend, sources said.
Selling the coal assets is a defensive move by Anglo American, which may see its share price re-rate and make a buyout by BHP more difficult without paying a high price after the mining giant made a play for Anglo American this year.
After rebuffing BHP, Anglo American announced an overhaul of its portfolio.
BHP could return with a new takeover bid for Anglo American when a six-month embargo expires later this week.
BHP boss Mike Henry ignited speculation about a revised bid with a recent visit to South Africa, where he reportedly met with the state-owned Public Investment Corporation, which has a 7.5 per cent stake in Anglo.
Under British takeover rules, BHP is in a standstill period until November 29 after making a spurned all-scrip takeover offer for Anglo and then walking away in May.
One theory is BHP could bide its time as pressure builds on Anglo to deliver on its copper-focused restructure.
BHP showed it still had an appetite for copper acquisitions in August with a $3.2bn punt on a 50 per cent share alongside Lundin Mining in two projects high in the Andes in Argentina.
Peabody agreed to a cash consideration of up to $US3.8bn, including $US2.05bn at completion and a deferred cash consideration of $US725m, plus the potential for up to $US550m in a price-linked earn out and a contingent cash consideration of $US450m linked to the reopening of the Grosvenor mine.
“The sale of our steelmaking coal business is another important step towards delivering the strategy that we set out in May to create a world class copper, premium iron ore and crop nutrients business,” Anglo American chief executive Duncan Wanblad said.
Final bids were due on November 13, with three offers lobbed, including one from Yancoal, another from the Australian-listed Stanmore Coal, which is 64 per cent owned by Indonesia’s Golden Energy Resources, 7.6 per cent by Regal Funds and 5 per cent by Matt Latimore, and the US-listed Peabody Energy.
Peabody is understood to have brought in plenty of reinforcements, with consortium partners in addition to Indonesia’s BUMA in its Moelis-advised camp.
Mr Wanblad said the demerger of Anglo American Platinum is expected by mid-2025 and there was strong interest in its nickel business with the sale process well progressed.
“We expect De Beers to follow,” he said of the South African diamond business.
The move by Peabody is a turnaround for the company that had entered Chapter 11 Bankruptcy in 2016.
It has counted activist investor Elliott Investment Management as an investor over the years and has taken a cautious approach since its recapitalisation to deal making activity.
But there had been recent speculation in the market that Peabody was back open for business when it came to transactions.
Anglo American will receive $US4.9bn in proceeds for its coal portfolio overall, given 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 has been Goldman Sachs and Morgan Stanley.
The St Louis-based company became a major force in the Australian coal market following its acquisition of the Australian-based Macarthur Coal portfolio in 2011 for about $US5bn.
“We look forward to integrating these assets, teaming up with their highly skilled workforce, and aligning with our new mine joint venture partners to create long-term value,” Peabody Energy president and chief executive officer, Jim Grech, said.
Anglo American’s Australian metallurgical coal mines are considered to be some of the best in the world, with the jewels being Moranbah North and Grosvenor, although the latter has been shut after the mine caught fire this year.
Anglo American said the steelmaking coal portfolio consists primarily of an 88 per cent interest in the Moranbah North joint venture; a 70 per cent interest in the Capcoal joint venture; an 86.36 per cent interest in the Roper Creek joint venture; a 51 per cent interest in the Dawson joint venture, Dawson South joint venture, Dawson South Exploration joint venture and the Theodore South joint venture; and a 50 per cent interest in the Moranbah South joint venture.
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