PERTH (miningweekly.com) – ASX-listed Macarthur Coal has rejected a trimmed takeover offer from US-based Peabody Energy, saying that it could not recommend the proposal to shareholders at the current price.

Earlier this month, Peabody lowered its offer from A$16 a share to A$15 a share, citing the 40% super profits tax which the Australian government planned to imposed on resources profits in 2012.

The downgraded offer, which valued Macarthur at A$3,8-billion, was also made after Peabody completed a due diligence exercise.

Under the proposal, Peabody was prepared to offer cash to all Macarthur shareholders and to provide the miner’s three major shareholders with the opportunity to retain their economic interest in the company.

“The Macarthur board has met today and considered Peabody’s further proposal and formed the view that based on the price and the conditions of the proposal, it cannot reasonably be recommended to shareholders,” Macarthur said on Tuesday.

The coal producer said that it had also consulted with its two largest shareholders and based on the feedback, considered that a scheme of arrangement, which would have required a 75% approval of shares voted and a 50% approval of shareholder votes, was unlikely to be approved.

Macarthur’s largest shareholder, the Citic Group said that it did not find the Peabody offer attractive. “Citic believes that the long-term strategic value of Macarthur Coal exceeds by a significant margin the cash offer price contained in Peabody’s proposal.”

Further, Citic said that the terms of the shareholders agreement to govern a privatised Macarthur Coal would be critical in any assessment by Citic.

“The proposed terms of a shareholder agreement tabled by Peabody in March 2010 are not acceptable to Citic,” the company stated.

Citic owns a 22,4% shareholding in Macarthur.

Meanwhile, Peabody said that based on the recent trading activity in Macarthur, it was apparent that the market recognised the premium that Peabody was offering.

“It is also unfortunate that one shareholder could block a proposal that would have created significant value for all Macarthur shareholders,” the company said.

Peabody, the world’s largest private-sector coal company, would now look towards advancing its internal growth projects and continuing to pursue other value-added investments to serve high demand markets.

Macarthur has recently scrapped an all share takeover offer from coal junior Gloucester, after its majority shareholder Noble rebuffed its advances, and walked away from a A$1,1-billion deal, which would have seen Macarthur acquiring Noble’s Gloucester shares, and entering into transactions relating to the Middelmount coal project, in which Noble would dispose of its stake in consideration for shares.

Meanwhile, the ASX-listed New Hope was offering Macarthur shareholders 2,7 of its own shares for every Macarthur share held, valuing the shares at A$14,58 a share, and the company at A$3,71-billion.

Macarthur shares on Tuesday fell to a low of A$11,23 a share, from a high of A$13,31 a share at the start of trade.

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