FREEHILLS IS advising Gloucester Coal Limited on its $391 million proposed acquisition by a subsidiary of Xstrata Coal via scheme of arrangement.
Mallesons Stephen Jaques partners Nick Pappas and Tim Bednall are advising Xstrata.
“One of the interesting things about this deal is that it continues the trend of consolidation in the coal industry driven by foreign buyers,” said Freehills’ lead partner on the deal Tony Damian.
“So in the past year we have seen Peabody pay $2 billion for Excel, we’ve seen the Brazilian [Companhia Vale do Rio Doce] buy assets of AMCI for $800 million, we’ve seen a stake in Felix Resources just recently change hands and now this.
“It’s a pretty rapid consolidation of the sector and it shows that Australia is now on the global map.”
With several more listed entities in the sector still up for grabs, he said “I suspect this isn’t the end of [the consolidation]”.
Xstrata’s offer is $4.75 per Gloucester Coal share via scheme of arrangement, which was unanimously approved by the Gloucester board earlier this month. The deal still requires court and shareholder approval, but is due to be completed by July.
“Our ability to blend thermal coal production from Xstrata’s existing Hunter Valley mines with Gloucester Coal’s thermal coal product, together with the addition of high-fluidity coking coal to our portfolio, diversifies our coal product offering further,” said Xstrata Coal chief executive Peter Coates in a statement.
Damian said the deal “relied on the cooperation of all parties” to complete it extremely quickly. The deal was announced on 10 April, and due diligence was completed on 20 April.
Australian-based Xstrata is the world’s largest privately held coal supplier, and provides about 10 per cent of US energy needs.
Gloucester Coal is a listed coal mining company with two mines at Stratford and Duralie in NSW.