Stock falters after rival offer to $5 billion proposal fails to emerge

SYDNEY - Investors are playing down the prospect of a bidding war breaking out for Australia's Macarthur Coal Ltd after UK newspaper reports said miner Anglo American PLC is considering a rival offer.

Macarthur shares rose just 2.4 percent to A$15.68 ($16.29) on Monday, about the same level as the $5 billion offer by US coal company Peabody Energy Corp and ArcelorMittal SA of A$15.66 a share, including a 16 cent dividend.

Macarthur shares hit a high of A$15.94 when Peabody went hostile on Aug 1, but the stock has faltered in recent weeks after a rival offer failed to materialize.

Anglo was considering a counterbid for Macarthur, according to unsourced reports in the Financial Times and Sunday Times newspapers. One of the reports said Anglo American might team up with China's Citic Group, a major Macarthur shareholder, to bid.

Anglo was likely one of a number of parties looking at Macarthur after its advisers opened a data room to drum up interest for a rival offer but would not necessarily launch an offer, two sources familiar with the deal told Reuters.

"There is a lot of pressure on the (Macarthur) board to make something out of this ... I'm sure there is somebody in the data room but the question is how serious are they and if it is Anglo, they look at everything," one source said. Macarthur and Anglo declined to comment on the reports on Monday.

Peabody and ArcelorMittal launched a hostile A$4.7 billion bid for Macarthur Coal on Aug 1 after the Australian target's board said the approach undervalued the company and that it was working on attracting a rival offer.

Citic, together with subsidiary Citic Resources Holdings Ltd, owns about 24 percent of Macarthur. Citic chairman Chang Zhenming told reporters on Friday that Citic had yet to decide whether to make a counterbid for Macarthur.

Macarthur has told its shareholders to take no action on the Peabody bid as it seeks rival offers from other parties.

Reuters

(China Daily 08/23/2011 page16)