Centennial Coal, Australia’s biggest independent coal producer, jumped 32 per cent after it agreed to a $2 billion takeover offer from Thailand’s Banpu Public Co. Banpu Public Company on Monday made an all-cash takeover bid for Centennial, valuing the company at $6.20 per share, which CMC Markets’ head of trading, James Foulsham, described as a “massive premium”.
Banpu will pay A$6.20 cash a share, 40 percent more than Centennial’s closing price on July 2, for the 80 percent of the producer it doesn’t own, the Sydney-based company said today in a statement. Centennial directors recommended the bid.
The deal gives Bangkok-based Banpu control of 10 mines in Australia, the world’s largest coal exporter, and power station customers in Japan and Europe. The Australian government’s decision last week to cut a planned new tax on mine profits may trigger more takeovers of resource companies.
Banpu said in a statement it was “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”.
It added that it was “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 shares were up 2.3 percent at 616 baht in early afternoon trading on the Thai stock exchange, while Centennial shares surged 31.90 percent higher in Sydney.
“It certainly looks like PM Gillard?s new (tax) has turned the takeover tap back on,” said IG Markets strategist Ben Potter. “This looks to be a significant windfall for Centennial shareholders and will likely reignite mergers and acquisitions speculation across the sector.”