Bloomberg News

Yanzhou Coal Said to Plan Purchase of Australia’s Gloucester

December 28, 2011

Dec. 19 (Bloomberg) -- Yanzhou Coal Mining Co., China’s fourth-largest producer of the fuel, plans to acquire Gloucester Coal Ltd. for at least $2 billion, a person with knowledge of the matter said.

The cash-and-stock bid for Gloucester, which has a market value of A$1.43 billion ($1.42 billion), will be made by Yancoal Australia Ltd., Yanzhou Coal’s Brisbane-based unit, the person said, asking not to be identified as the details are private. The person declined to give an exact offer price.

Yancoal may spend more than $1 billion buying more mines in Australia as global market turmoil makes assets cheaper, Murray Bailey, managing director of the unit, said in a September interview. Yanzhou Coal, which said earlier this year that it plans an initial public offering of its Australian assets, will use the Gloucester purchase as a means of listing Yancoal in the country, the person said.

Yanzhou Coal’s shares will be suspended from tomorrow because of a “proposed transaction,” according to a statement to the Shanghai Stock Exchange today. The stock has fallen 34 percent in Hong Kong so far this year, while Gloucester has dropped 42 percent in Sydney.

Singapore-based Noble Group Ltd. owns 64.5 percent of Gloucester, Bloomberg data show. Spokespeople for Yancoal, Gloucester and Noble didn’t immediately return calls seeking comment on the proposed deal after regular business hours today.

Yanzhou bought Felix Resources Ltd. for A$3.1 billion in 2009 in what was China’s biggest takeover of an Australian company at the time.

Coal deals involving companies in Australia, the world’s biggest exporter of the fuel, swelled to a record $11.9 billion this year from $9.44 billion in 2010, according to data compiled by Bloomberg. The biggest deal was Peabody Energy Corp.’s $4 billion takeover of Macarthur Coal Ltd. in July. The average premium paid globally this year in coal acquisitions is 19 percent, the data show.

--With assistance from Elisabeth Behrmann in Sydney. Editors: Mohammed Hadi, Philip Lagerkranser

To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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