Arcelor Mittal Acquires Stake in Macarthur Coal

Submitted by Craig Strzelecki on 22 May, 2008 - 11:20

Arcelor Mittal, headed by steel billionaire Laxmi Mittal, is the world’s largest steel maker by volume, acquired 14.9 percent in Macarthur Coal (MCC) which shook up the possible takeover bid of the coal miner. Ken Talbot decided to split his majority shareholding and allowed Mittal’s company, Arcelor Mittal, to acquire stake in his company. He agreed to sell his 9.1 million shares that accounts to nearly 20 percent of his stake in the company to ArcelorMittal at $19.96 per share. The price offered by Arcelor Mittal was an 8.5% premium to Mararthur Coal’s last trade.

Macarthur Coal was supposedly in the middle of a takeover bid with an unnamed third party which is supposedly, Xstrata. Macarthur board ended its month long talks with Xstrata, Anglo Swiss Miner. Talks with Xstrata had been going on since past one month but had not resulted in any bid.

Arcelor Mittal escalated to the 14.9 percent position after it managed to get hold of 10 percent shares from Nathan Tinkler for $440 million. It now holds maximum stake in the company that is allowed for any foreign company without approval from the Australian Foreign Investment Review Board. Lakshmi Mittal revealed that it had been accumulating Macarthur Coal shares in small blocks ever since the miner received an incomplete takeover offer from a third party.

Arcelor Mittal is one of the biggest customers of Macarthur Coal that purchases 20% of its output. The current move is being perceived as Mittal’s interest to protect its supply agreements with the company by having a larger stake in its shares. Macarthur Coal is world’s largest supplier of pulverised coals required for making steel. It produces about 35 percent of world’s supply of coking coal that can be directly injected in the blast furnaces. The possible takeover of the company by any third party may have threatened its supply agreements. Mittal also wanted to ensure its role in any future developments in the company.

After the news regarding Arcelor Mittal became public, Macarthur Coal (shares jumped 8.1% and soared to $20.98 as all time day high. It subsequently closed at A$19.86 which was A$1.48 higher than its previous day close.