Steel maker ArcelorMittal has made an unexpected last-minute withdrawal from its US$ 5 billion joint bid for control of Macarthur Coal, leaving joint venture partner Peabody Energy to proceed with the takeover alone.
The timing of the decision comes as a surprise to many as, after a long takeover battle, PEAMCoal – Peabody and ArcelorMittal’s joint bid vehicle – has recently gained approval from the Chinese Ministry of Commerce for the takeover. But the cost of the acquisition rose when Macarthur’s largest shareholder, Citic Group, tended its shares and accepted the offer of AU$ 16/share (US$ 16.6/share). With US$ 25 billion in debt and the looming threat of a double-dip recession, ArcelorMittal “determined that it would no longer be appropriate to allocate substantial capital to the acquisition of a non-controlling, minority business interest,” according to a statement released by the company.
Peabody Energy, meanwhile, greeted the announcement as “good news for Peabody”. Gregory H. Boyce, the company CEO, said in a statement: “ArcelorMittal’s decision accelerates our ability to realise synergies, integrate the operations and benefit from the results.”
ArcelorMittal could sell its existing 16% share of Macarthur to Peabody for up to US$ 700 million.
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