Citic arm to sell Macarthur stake
Shares in Citic Resources rose 24 per cent yesterday after the company, a unit of state-owned Citic Group, said it would sell its stake in Australian miner Macarthur Coal.
Citic Resources and Citic Group are selling their combined 25 per cent of Macarthur to two bidders for the Queensland-based coal company, European steelmaker Arcelor Mittal and US miner Peabody Group.
Citic Resources announced it would turn a profit of up to A$398 million (HK$3.17 billion).
The mainland companies have rejected previous bids for Macarthur by Peabody, which made its first offer in March last year.
The US miner joined forces with Arcelor in July. Since then, Peabody and Arcelor raised their offer from A$15.50 a share to A$16, with the Queensland company agreeing to the takeover in late August.
The two Macarthur suitors will raise the offer price further, to A$16.25, if they get 90 per cent shareholder acceptance by November 11. That would value MacArthur at A$4.9 billion. The Citic sales take the joint bidders' ownership of Macarthur to 49 per cent.
Mining remains a frenetic sector for mergers.
Even though weak economic performance in the West means commodities demand is coming off the boil, resources firms want to deploy cash they piled up during recent boom times.
Macarthur is also one of very few big acquisition targets still available in an Australian coal market dominated by global mining giants including BHP Billiton and Xstrata.
'In the last couple of years, major miners have been very cash-positive and built up large balances, and the opportunities to spend that money on acquiring new projects have been restricted,' said Peter Markey, a Shanghai-based mining expert at Ernst & Young.
'Many brand new projects are in difficult areas and harder to develop than the existing ones. Additionally, you have governments getting more protective about foreign ownership.'
No spokesmen for any of the parties were available for comment.
Citic Resources rose 20 cents yesterday, closing at HK$1.03.