mineral exploration project – commodity prices – mining stock- trade and market

Centennial Coal has accepted a cash offer with a 40 per cent premium from Thailand’s Banpu, valuing the NSW coal miner at $2.4 billion.

As revealed by The Australian on its website earlier today, Centennial confirmed Banpu — Thailand’s biggest coal producer — has offered $6.20 a share for the 80 per cent of the Hunter Valley thermal coal producer it doesn’t already own.

Banpu said it would finance the deal through cash reserves and new and existing credit facilities. JPMorgan is advising Banpu, with UBS advising Centennial.

The offer is at a 40 per cent premium to Centennial’s $4.42 closing price on Friday, the same day the federal government overhauled its controversial mining tax proposal.

The uncertainty created by the original tax structure had hampered miners’ share prices as well as potential mergers and acquisitions in the resources sector.

IG Markets strategist Ben Potter said it appeared that Prime Minister Julia Gillard’s new mining tax that lowered the headline rate from 40 per cent to an effective 22.5 per cent “has turned the takeover tap back on”.

“At a 40 per cent premium to the last traded price, this looks to be a significant windfall for Centennial shareholders and will likely reignite M&A speculation across the sector,” he said.

“The certainty brought about by the new minerals resources rent tax has facilitated this latest bid and will likely see further foreign capital invested in Australian mining and energy assets.”

Speculation had been building that Banpu would launch a full bid after buying up its 20 per cent stake through JPMorgan in separate raids on its share registry, despite Banpu chief executive Chanin Vongkusolkit attempting to hose down the speculation by saying the investment was appropriate.

Mr Vongkusolkit said today the transaction presented a unique and compelling opportunity for all stakeholders involved.

“Banpu is excited to have exposure to the Australian coal sector and believes that an acquisition of Centennial would be the initial step in driving further consolidation of the sector,” he said.

“In addition, Banpu is strongly supportive of the Centennial management team and its current strategy, and would expect Centennial’s existing management team to continue with operations and development projects as planned.

“Banpu’s offer for Centennial is at a significant premium to recent trading levels of Centennial and has regard to Centennial’s strategy of supplying domestic and export markets, and increasing its mix of coal sales to export parity pricing, as well as mooted expansion and development plans such as Newstan Lochiel.”

Centennial’s board has unanimously recommended the offer in the absence of a superior proposal and subject to an independent expert finding the offer is fair and reasonable.

All Centennial directors intend to accept the offer with respect to their own shareholdings.

The bid is also conditional on a range of factors, including clearance from Australia’s Foreign Investment Review Board and Banpu obtaining 75 per cent shareholder approval.

Banpu’s bidder’s statement will be sent to Centennial shareholders by August, with an extraordinary general meeting to be held by Banpu in mid-August.

Centennial managing director Bob Cameron said Banpu has indicated its intention to maintain current operations and employees.

“Centennial is strategically placed to take advantage of strong demand for thermal coal, with long term domestic contracts expiring in coming years,” he said.

“We also expect to grow production as a result of our new operations at Airly and the Newstan Lochiel project.”

Analysts said Banpu had a “big appetite” for thermal coal to feed Thailand’s consumption needs, with Deutsche Bank recently tipping thermal coal contract prices to rise 26 per cent to $US120 a tonne by 2012.

Find More Other News : Centennial Coal - coal demand - coal export - coal prices - coal producer