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Gloucester directors back Macarthur takeover offer

Published 9:39 AM, 4 Mar 2010 Last update 12:10 PM, 4 Mar 2010

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By a staff reporter

Independent directors of Gloucester Coal Ltd have recommended the company's shareholders accept a takeover offer from Macarthur Coal Ltd, in the absence of a superior proposal.

Gloucester said an independent expert's report from Deloitte Corporate Finance found Macarthur's offer to be fair and reasonable.

On December 22, Macarthur launched its takeover offer for Gloucester, offering shareholders a choice of either 0.84 Macarthur shares for every one Gloucester share, or $8.00 cash for every one Gloucester share.

Last month, Macarthur reiterated its recommendation that its shareholders approve the issue of shares to Gloucester Coal Ltd's 87.7 per cent shareholder, Noble Group, Asia's largest commodities trading house.

Macarthur also asked its investors to agree to its bid to acquire Noble Group's interest in the Middlemount mine in Queensland, which would give Macarthur full control of that project.

The deal means Noble Group could become Macarthur's largest shareholder with a stake of up to 24.6 per cent, surpassing China's CITIC, which holds a 22.4 per cent interest in the miner.

In its report, Deloitte said it did not believe Noble Group or any associate of Noble Group would receive a collateral benefit as a result of the Middlemount acquisition.

"Based on a qualitative and quantitative analysis of the Middlemount Transaction and having regard to the limitations set out in the Independent Expert’s Report nothing has come to the attention of the Independent Expert to cause the Independent Expert to believe that the Middlemount Transaction would constitute a receipt by Noble of a collateral benefit," Deloitte said.

The company found that the estimated fair market value of a share in Gloucester was in the range of $7.75 to $8.75 on a control basis.

Deloitte also said the valuation range for a share in the merged entity has been estimated in the range of $8.90 to $10.80, and based on the share market trading activity in Macarthur since the announcement of the takeover offer, the assessed value of a share in the merged company would be in the range of $10.00 to $11.00.

Macarthur shares fell 0.26 per cent to $11.27 at 1209 AEDT, while Gloucester improved 0.85 per cent to $9.41, against a 0.12 per cent drop in the benchmark index.




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