Australia's Gloucester Coal agrees to Chinese takeover

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Kazakhstan News.Net
Friday 23rd December, 2011

SYDNEY - Australian miner Gloucester Coal Ltd has agreed to be acquired by China's Yanzhou Coal Mining Co. Ltd. in a $2.13 billion deal, which will see further consolidation in the country's mining sector.

Gloucester Coal said its largest shareholder Singapore's Noble Group Ltd, which holds 64.5 per cent stake in the company, has given its consent to the deal.

"Noble has informed the independent directors of Gloucester that, subject to approval by the Noble board of directors and in the absence of a superior proposal, it intends to vote its shareholding in favour of the merger proposal," the company said in a statement.

Under the deal, Yancoal Australia Ltd., a wholly owned subsidiary of Yanzhou Coal, will acquire Gloucester in order to merge both companies' coal mines in New South Wales and Queensland. Yancoal will control 77 percent of the new company, while the remaining 23 percent will owned by Gloucester shareholders.

The deal will see China's Yancoal step up its long march into Australian coal deposits, having so far this year spent $19 billion in mining acquisition within the country this year.

In the consolidation spree engulfing the coal mining sector this year, there have been 10 separate deals involving more than a dozen coal deposits in Australia and overseas. Most of these deals are by Chinese and Indian companies seeking to secure supplies overseas to bridge shortages in coal supplies back home.

Yancoal is developing eight projects in Australia with the capacity to turn out 48 million tonnes a year. The Gloucester merger is Yancoal's third coal asset purchase this year.

In August, it bought the private Syntech Resources for $203 million and in September it acquired two Wesfarmers coal mines, Premier and Char, in a $297 million deal. The $2.13 billion deal for Gloucester will create the ninth-largest coal mining operation in the world.

Shareholders in Gloucester will retain 23 per cent of the new $6.5 billion company. Yancoal will be spun out of Yanzhou, but the Chinese parent company will remain a substantial investor in the Australian organisation that is likely to list on the Australian Securities Exchange next year.

Gloucester shareholders will have the option to receive either all ordinary shares in the merged company or a combination of ordinary shares and Contingent Value Rights (CVR) shares.

Spokesmen for Yancoal and Gloucester - along with sector analysts - could not confirm what proportion of the new listed shares would be liquid, given that the Chinese subsidiary would retain 77 per cent of the merged miner.

What sets this latest deal apart from others in the sector this year is that it will create an entity that remains on the stock market.

All other deals involving listed coal companies this year have led to them being taken off the boards. Those affected include Riversdale Resources, Coal Allied, Macarthur Coal, Hunnu Coal and - if a proposed merger with Whitehaven goes ahead - Aston Resources.

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Source: http://www.kazakhstannews.net/story/202101620

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