Monday, April 19, 2010

Gloucester-Macarthur merger: Noble shareholders vote "No"

19 April 2010, Hong Kong


"Noble Group wishes to announce that the merger proposal between Macarthur and Gloucester was soundly defeated by shareholders in a vote held in Hong Kong at 2.30pm today."
 
The Noble-Peabody-New Hope tussle for Macarthur Coal took another strange twist today, as Noble shareholders voted down the merger of Gloucester and Macarthur, a deal which would see Noble own almost a quarter of the new entity. Considering that the proposal was "soundly defeated", this strongly suggests that Noble's management has other plans in mind (Richard Elman's trust still owns a controlling stake while CIC would not jeopardise the company's expansionary plans, not after acquiring such a substantial stake).
 
Certainly, after being so close to sealing the deal, there is no way that Noble will give up Macarthur (and its assets) so easily, and the voting down of the proposal simply indicates that a new strategy is in place, perhaps a hostile one. Noble owns 30% of Middlemount Mine, a significant asset in the Macarthur portfolio of mining assets, and has the option to raise this stake to 50% for A$100 million. Also, Noble owns 10% of the Monto project, of which Macarthur remains the majority owner. There could also be options attached to Noble's stake in Monto, which upon exercising could reduce the attractiveness of  Macarthur to Peabody (Noble highlighted its interest in both projects in a warning note directed at Peabody on 5 April, saying its quiver is "far from empty").
 
We look forward with great excitement to see what Noble has up its sleeves in this game of M&A chess.

Sharebuilder purchases for today (19 Apr 2010):
32 shares of STI ETF at $2.9989, 20 shares of Fraser and Neave at $4.84

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