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Citic bides its time in Macarthur bidding

by Paul Whitfield  |  Published August 19, 2011 at 12:25 PM
anthracite_coal227x128.jpgCitic Resources Holdings Ltd. said Friday that it will bide its time as it ponders what to do with its roughly 24% stake in Macarthur Coal Ltd., an Australian metallurgical coal mining company that is the subject of a hostile A$4.7 billion ($4.9 billion) offer from Peabody Energy Corp. and ArcelorMittal.

State-owned Citic, Macarthur's biggest shareholder, has been tipped as a possible spoiler for the Peabody-led offer, which values Macarthur at A$15.50 per share. The Hong Kong-based company has so far declined to comment on the offer, a position that remained little changed Friday following a cryptic "no comment" by its chairman.

"It is not yet time to show our stance," Chang Zhenming told a press conference Friday in response to a question about his company's intention to make a counteroffer. Zhenming subsequently declined to elaborate.

Macarthur said as recently as Aug. 4 that it is still holding talks with other potential bidders.

Counteroffers could come from Xstrata plc, Brazil's Vale SA and Chinese coal assets acquisition vehicle Yancoal Australia Ltd., as well as Citic, according to analysts.

Citic's stoic silence is reminiscent of its response to Peabody's abortive A$3.8 billion bid for Macarthur in 2010. At that time, the Chinese resources investor was the last of Macarthur's major shareholders to declare that it would not tender shares to that offer. Peabody, of St. Louis, subsequently abandoned the bid after Macarthur rejected it as too low.

Macarthur chairman Keith DeLacy has adopted the same stance in response to the new offer and on Wednesday urged shareholders to reject Peabody's "opportunistic attempt to acquire Macarthur at a time of global economic volatility and regulatory uncertainty in Australia."

Macarthur has told the bidders that it is looking for a better offer. It has said that it would back a A$16 per share offer but only if the bidders agree to a clause that would increase the price to A$18 per share if they secure 90% of Macarthur's shares.

Shares in Macarthur closed Friday at A$15.32, down A$0.18, or 1.2%, on their previous close.

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Tags: ArcelorMittal | Citic Resources Holdings Ltd. | coal | energy | hostile offer | M&A | Macarthur Coal Ltd. | Peabody Energy Corp.

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Paul Whitfield

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