Yanzhou Coal Mining Co. (1171) offered about A$700 million ($709 million) in cash and a 23 percent stake in its Australian unit for Gloucester Coal Ltd. (GCL), said two people with knowledge of the matter.
Under the proposal, Gloucester Coal will be merged with Yancoal Australia Ltd., and Yanzhou will own 77 percent of the new company, said the people, who declined to be identified because the terms aren’t public. Gloucester Coal shareholders will receive A$3.20 in cash per share, on a fully diluted basis, the people said.
Buying Gloucester, controlled by Hong Kong-based Noble Group Ltd. (NOBL), will add four coal mines and access to ports in Australia, where Yanzhou operates six mines. Yanzhou plans to boost production there to about 30 million metric tons from about 16 million tons over the next five years to help meet growing demand from China, UBS AG said in a note dated Dec. 20, citing an investor presentation.
Yanzhou Coal also offered a payment of as much as A$3 per share should the stock fall below A$6.96 in the 18 months after the deal closes, the people said. The so-called value protection clause, and the dividend payment imply a value of A$2.2 billion for Gloucester, one person said.
Gloucester Coal closed at A$7.03 in Sydney trading on Dec. 19, before trading in the shares was suspended. Yanzhou Coal plans to use the purchase as a means of listing its Australian assets, a person with knowledge of the matter said earlier this week.
Zhang Baocai, Yanzhou Coal’s board secretary, declined to comment on details of the deal. Calls to Marie Festa, director of investor relations at Gloucester Coal, went unanswered after normal business hours.
Ronald K - Market Psychologist - The Big Speculator
Under the proposal, Gloucester Coal will be merged with Yancoal Australia Ltd., and Yanzhou will own 77 percent of the new company, said the people, who declined to be identified because the terms aren’t public. Gloucester Coal shareholders will receive A$3.20 in cash per share, on a fully diluted basis, the people said.
Buying Gloucester, controlled by Hong Kong-based Noble Group Ltd. (NOBL), will add four coal mines and access to ports in Australia, where Yanzhou operates six mines. Yanzhou plans to boost production there to about 30 million metric tons from about 16 million tons over the next five years to help meet growing demand from China, UBS AG said in a note dated Dec. 20, citing an investor presentation.
Yanzhou Coal also offered a payment of as much as A$3 per share should the stock fall below A$6.96 in the 18 months after the deal closes, the people said. The so-called value protection clause, and the dividend payment imply a value of A$2.2 billion for Gloucester, one person said.
Gloucester Coal closed at A$7.03 in Sydney trading on Dec. 19, before trading in the shares was suspended. Yanzhou Coal plans to use the purchase as a means of listing its Australian assets, a person with knowledge of the matter said earlier this week.
Zhang Baocai, Yanzhou Coal’s board secretary, declined to comment on details of the deal. Calls to Marie Festa, director of investor relations at Gloucester Coal, went unanswered after normal business hours.
Ronald K - Market Psychologist - The Big Speculator
