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Yanzhou gains 4 coal assets with purchase of Gloucester
Source: Bloomberg News |
December 23, 2011, Friday
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YANZHOU Coal Mining Co has agreed to buy Gloucester Coal Ltd for about A$700 million (US$709 million) and a 23 percent stake in its Australian unit, gaining mines and port capacity in the largest coal-exporting nation.
Under the plan, Sydney-based Gloucester will merge with Yancoal Australia Ltd, and Yanzhou will own 77 percent of the new company, the Chinese coal producer said yesterday in a statement. Gloucester stockholders will receive A$3.20 in cash per share, it said.
Buying Gloucester, controlled by Noble Group Ltd, will add four coal projects and access to ports in Australia, where Yanzhou operates six mines. Yanzhou plans to boost annual output there to about 30 million tons from about 16 million tons in the next five years to help meet growing demand from China, UBS AG said in a note on Tuesday.
Felix Lam, a Hong Kong-based analyst at Daiwa Securities Capital Markets Co, said: "Yanzhou Coal wants to make sure its coal-mine portfolio in Australia is strong enough to support its production growth in years to come.
"The port facilities are of strategic importance because they will allow it to connect its mining sites directly to marine transportation."
Yanzhou's board has approved the transaction, the company said in an earlier statement. It's advised by Citigroup Inc, UBS and Goldman Sachs (Asia) LLC, as well as by law firms Freehills, Baker & McKenzie and King & Wood. Gloucester is advised by Lazard Ltd and Noble by Blackstone Group.
Coal deals involving companies in Australia swelled to more than US$11 billion this year from US$9.44 billion in 2010, according to data compiled by Bloomberg News. The biggest transaction was Peabody Energy Corp's US$4 billion takeover of Macarthur Coal Ltd in July. The average premium paid globally this year in coal acquisitions is 19 percent, the data show.
Yanzhou also offered a payment of as much as A$3 a share should the stock fall below A$6.96 in the 18 months after the deal closes, according to the statement. The so-called value protection clause and the dividend payment imply a value of A$2.2 billion for Gloucester, a person with knowledge of the matter said, declining to be identified.
Yancoal Australia will replace Gloucester on the country's stock exchange, allowing Yanzhou to use the purchase to list its Australian assets. Gloucester ended at A$7.03 in Sydney on Monday before trading in the shares was halted.
Yancoal Australia has to list at least 30 percent of its local assets by the end of 2012 as part of conditions for its A$3.1 billion takeover of Felix Resources Ltd in 2009.
Under the plan, Sydney-based Gloucester will merge with Yancoal Australia Ltd, and Yanzhou will own 77 percent of the new company, the Chinese coal producer said yesterday in a statement. Gloucester stockholders will receive A$3.20 in cash per share, it said.
Buying Gloucester, controlled by Noble Group Ltd, will add four coal projects and access to ports in Australia, where Yanzhou operates six mines. Yanzhou plans to boost annual output there to about 30 million tons from about 16 million tons in the next five years to help meet growing demand from China, UBS AG said in a note on Tuesday.
Felix Lam, a Hong Kong-based analyst at Daiwa Securities Capital Markets Co, said: "Yanzhou Coal wants to make sure its coal-mine portfolio in Australia is strong enough to support its production growth in years to come.
"The port facilities are of strategic importance because they will allow it to connect its mining sites directly to marine transportation."
Yanzhou's board has approved the transaction, the company said in an earlier statement. It's advised by Citigroup Inc, UBS and Goldman Sachs (Asia) LLC, as well as by law firms Freehills, Baker & McKenzie and King & Wood. Gloucester is advised by Lazard Ltd and Noble by Blackstone Group.
Coal deals involving companies in Australia swelled to more than US$11 billion this year from US$9.44 billion in 2010, according to data compiled by Bloomberg News. The biggest transaction was Peabody Energy Corp's US$4 billion takeover of Macarthur Coal Ltd in July. The average premium paid globally this year in coal acquisitions is 19 percent, the data show.
Yanzhou also offered a payment of as much as A$3 a share should the stock fall below A$6.96 in the 18 months after the deal closes, according to the statement. The so-called value protection clause and the dividend payment imply a value of A$2.2 billion for Gloucester, a person with knowledge of the matter said, declining to be identified.
Yancoal Australia will replace Gloucester on the country's stock exchange, allowing Yanzhou to use the purchase to list its Australian assets. Gloucester ended at A$7.03 in Sydney on Monday before trading in the shares was halted.
Yancoal Australia has to list at least 30 percent of its local assets by the end of 2012 as part of conditions for its A$3.1 billion takeover of Felix Resources Ltd in 2009.
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