US-listed Peabody Energy has acquired Anglo American’s Australian steelmaking coal mines and will pay up to US$3.8 billion (A$5.8 billion). The deal bolsters Anglo’s balance sheet as the miner fends off the potential return of a takeover bid by BHP Group.
Peabody outbid competitors Yancoal and Stanmore Coal.
The sale is part of Anglo’s strategy to streamline its portfolio, potentially making it less vulnerable to a BHP takeover without a significant premium.
Takeover rebuffed
Anglo rebuffed an all-scrip offer from BHP earlier this year and has since focused on restructuring its business towards copper, premium iron ore and crop nutrients.
Under British takeover rules, BHP is restricted from pursuing Anglo again until November 29. However, speculation has grown after BHP chief executive Mike Henry’s recent visit to South Africa, where he met with stakeholders, including the Public Investment Corporation, which holds a 7.5% shareholder in Anglo.
Peabody’s offer includes an upfront payment of US$2.05 billion, a deferred US$725 million and additional payments linked to coal prices and the reopening of the Grosvenor mine.
Anglo’s chief executive Duncan Wanblad described the transaction as a step forward in achieving the company’s strategic goals.
“The sale of our steelmaking coal business is another important step towards delivering the strategy that we set out in May to create a world-class copper, premium iron ore and crop nutrients business,” Wanblad said.
The transaction marks a significant turnaround for Peabody, which emerged from Chapter 11 bankruptcy in 2016 and has been cautious in dealmaking since. “We look forward to integrating these assets and creating long-term value,” Peabody CEO Jim Grech said.
Anglo expects total proceeds of US$4.9 billion from its coal portfolio, including a separate US$1.6 billion sale of stakes in other mines to Brisbane billionaire Sam Chong. Advisors on the sale included Goldman Sachs and Morgan Stanley.