Peabody Trims Macarthur Bid
May 10, 2010 5:16 AM
Peabody Coal (NYSE: BTU), the largest U.S. coal producer, pared its buyout offer for Australia's Macarthur Coal due to a proposed 40% tax increase on mining firms operating in Australia by that country's government.
Peabody has lowered its bid to $3.4 billion from $3.8 billion, in theory making the latest offer Peabody's fourth for Macarthur. Macarthur rejected Peabody's first two offers. The latest offer is still above the first two bids.
The Aussie tax proposals have not yet been ratified, but mining firms have seen their shares hammered on the news and analysts have speculated that the tax hike would stifle investment in the sector and M&A activity.
Peabody noted that its latest offer is still "compelling" and that it represents a premium to where Macarthur shares traded in March. Macarthur told its shareholders to take no action ahead of a board meeting to "consider and assess the merits of Peabody’s" latest offer, according to the Financial Times.
