maverick
06-12-2007, 07:41 PM
Australian mining outfit Resource Pacific’s shares reached an all-time high Wednesday after Xstrata Coal, the world's largest exporter of thermal coal, used for electricity production, made an unconditional cash offer for the firm, which is based in the Hunter Valley of New South Wales.
Xstrata Coal, a subsidiary of London-listed Xstrata, said Wednesday it would bid for Resource Pacific at a price of 2.85 Australian dollars (U.S.$2.48) cash per share, valuing the company at around A$960 million ($836.6 million).
Xstrata's bidding price represents a 24% premium to New Hope Corp.'s most recent all-scrip proposal in November. New Hope, a thermal coal miner based in Ipswich, Queensland, offered to exchange each Resource Pacific share for 0.94 New Hope shares. The tender valued Resource Pacific at A$2.30 ($2.00) per share, or about A$774 million ($673 million) at its Wednesday market price.
Resource Pacific owns the Newpac mine, which controls the largest identified semisoft coking coal resources in the Hunter Valley, with more than 252 million tons in reserve. At a time when spot coal prices are at record highs, Resource Pacific has become a sexy takeover target. It had already turned down New Hope's all-share offer.
''This is a highly attractive offer for Resource Pacific shareholders, providing the immediate opportunity to realise a cash premium for their investment in a single mine operation,'' Xstrata Coal Chief Executive Peter Coates said.
Xstrata may know Resource Pacific better than any other conceivable bidder since the company operates several mines in the area close to Resource Pacific's Newpac deposits. Coates stressed that Xstrata Coal has a proven history in Hunter Valley and is “technically and financially capable to achieve Resource Pacific's potential."
Raising its chips to win the takeover battle, Xstrata, which already owned 5.28% of Resource Pacific’s shares, entered into an agreement to absorb Japanese conglomerate Marubeni Group's 10.28% stake in the target company, upping its shareholding to 15.56%.
Nevertheless, Paul Jury, managing director of Resource Pacific, advised investors not to sell their shares too quickly. "We see a lot of value in our Newpac, Hunter Valley mine and any shareholder who exits now will lose the opportunity to benefit from this value by remaining a shareholder or accepting any higher offer that may emerge," he said.
'We are on the cusp of unlocking substantial value for our shareholders, " Jury further emphasized. Resource Pacific is embarking its second phase of its growth plan, to increase production at Newpac to 8 million tons per year in 2010.
The board of Resource Pacific is now considering whether Xstrata's bid takes into account the growth potential and will make a formal recommendation to shareholders in due course. Indeed, Xstrata may have to sweeten its offer price, given recent market trends.
Speculation over Xstrata's bid has already pushed the share price of Resource Pacific up 20% on Monday to A$2.91 ($2.53). The stock surged a further 3.4%, or 10 Australian cents (8.6 U.S. cents), to A$3.01 ($2.62), which is 5.6% higher than Xstrata's offer, on Wednesday afternoon
Xstrata Coal, a subsidiary of London-listed Xstrata, said Wednesday it would bid for Resource Pacific at a price of 2.85 Australian dollars (U.S.$2.48) cash per share, valuing the company at around A$960 million ($836.6 million).
Xstrata's bidding price represents a 24% premium to New Hope Corp.'s most recent all-scrip proposal in November. New Hope, a thermal coal miner based in Ipswich, Queensland, offered to exchange each Resource Pacific share for 0.94 New Hope shares. The tender valued Resource Pacific at A$2.30 ($2.00) per share, or about A$774 million ($673 million) at its Wednesday market price.
Resource Pacific owns the Newpac mine, which controls the largest identified semisoft coking coal resources in the Hunter Valley, with more than 252 million tons in reserve. At a time when spot coal prices are at record highs, Resource Pacific has become a sexy takeover target. It had already turned down New Hope's all-share offer.
''This is a highly attractive offer for Resource Pacific shareholders, providing the immediate opportunity to realise a cash premium for their investment in a single mine operation,'' Xstrata Coal Chief Executive Peter Coates said.
Xstrata may know Resource Pacific better than any other conceivable bidder since the company operates several mines in the area close to Resource Pacific's Newpac deposits. Coates stressed that Xstrata Coal has a proven history in Hunter Valley and is “technically and financially capable to achieve Resource Pacific's potential."
Raising its chips to win the takeover battle, Xstrata, which already owned 5.28% of Resource Pacific’s shares, entered into an agreement to absorb Japanese conglomerate Marubeni Group's 10.28% stake in the target company, upping its shareholding to 15.56%.
Nevertheless, Paul Jury, managing director of Resource Pacific, advised investors not to sell their shares too quickly. "We see a lot of value in our Newpac, Hunter Valley mine and any shareholder who exits now will lose the opportunity to benefit from this value by remaining a shareholder or accepting any higher offer that may emerge," he said.
'We are on the cusp of unlocking substantial value for our shareholders, " Jury further emphasized. Resource Pacific is embarking its second phase of its growth plan, to increase production at Newpac to 8 million tons per year in 2010.
The board of Resource Pacific is now considering whether Xstrata's bid takes into account the growth potential and will make a formal recommendation to shareholders in due course. Indeed, Xstrata may have to sweeten its offer price, given recent market trends.
Speculation over Xstrata's bid has already pushed the share price of Resource Pacific up 20% on Monday to A$2.91 ($2.53). The stock surged a further 3.4%, or 10 Australian cents (8.6 U.S. cents), to A$3.01 ($2.62), which is 5.6% higher than Xstrata's offer, on Wednesday afternoon