New Hope Will Seek Other Acquisitions If Bid Fails

April 18 (Bloomberg) -- New Hope Corp., battling Peabody Energy Corp. and Noble Group Ltd. for control of Macarthur Coal Ltd., will look for other acquisitions if it is unsuccessful in its bid for Australia’s largest producer of pulverized coal, Chairman Rob Millner said.

Macarthur said April 15 that New Hope’s revised takeover bid, which included A$950 million ($878 million) in cash, doesn’t represent an adequate premium for control of the company, and therefore will not recommend the offer to shareholders. Instead, Brisbane-based Macarthur said April 16 it intends to enter into talks with St. Louis-based Peabody, which sweetened its bid to A$16 a share, valuing the company at A$4.1 billion.

New Hope, based in Ipswich, Queensland, will continue to focus on coal acquisitions, Millner said today in an interview on the Australian Broadcasting Corporation. “If we can’t find anything in coal, we’ll have to go and look somewhere else.”

Growing demand from China and India led coal prices to double last year, and boosted the resources industry in Australia, the world’s biggest shipper of coal and iron ore. In 2009, China’s coal imports more than tripled to 125.8 million tons, according to data from the Beijing-based General Administration of Customs.

“Going forward, there’s a real shortage of particularly pulverized coal in the world, and most of the ports around the world are constrained by capacity, so I see a good future for coal, both thermal and PCI coal,” Millner said.

New Hope’s Offer

New Hope is in a good position financially to make a play for Macarthur, Andrew Harrington, coal analyst at Paterson Securities, said in an interview on ABC.

“They don’t have any debt on their balance sheet,” he said. “They’ve got A$1.5 billion in cash in the bank and probably another half billion coming from the sale of their Arrow Energy shares, so they could easily plonk down the cash and raise some financing to afford this.”

If New Hope is successful in its bid for Macarthur, the company will have about A$1 billion to develop its own and Macarthur’s assets, Millner said.

“Both companies have some considerable development work to do in the next two to three years, so we will need that cash,” he said.

Macarthur Bids

Xstrata Plc may have joined the tussle for Macarthur, offering major shareholders a cash-and-shares offer of just under A$16 a share, the Australian Financial Review reported April 15 in its Street Talk column.

Macarthur’s second-largest shareholder, ArcelorMittal, said Peabody’s revised bid, a 14 percent improvement on its previous offer, merits further study. Third-largest shareholder Posco said it supported the offer in the absence of a higher bid and depending on Macarthur recommending the deal, the companies said April 16.

Macarthur postponed a shareholder meeting scheduled for April 19, a condition of Peabody’s revised offer, to vote on a proposal to make Hong Kong-based Noble its biggest shareholder.

Noble’s offer proposes that Macarthur buy Gloucester Coal Ltd., which is 87.7 percent owned by the Hong Kong commodity supplier. Noble is backed by China’s sovereign wealth fund.