July 11, 2011 3:58 PM

Aussie Firms Take Lead on Macarthur Coal Takeover Bid

Posted by Brian Baxter

UPDATE: 8/30/11, 11:20 a.m. The New York Times reports that Macarthur Coal has accepted a raised takeover bid by ArcelorMittal and Peabody Energy valuing the target at $5.2 billion.

Global steel giant ArcelorMittal and Peabody Energy have teamed up for a $5.1 billion bid to acquire Macarthur Coal, a company named after former U.S. general Douglas MacArthur, Reuters reports.

Macarthur previously rejected a $3 billion takeover bid by Peabody in March 2010, claiming the offer undervalued the Brisbane-based company; it spurned another offer by Australian coal mining rival New Hope the following month.

Corporate partners Teresa Handicott, Braddon Jolley, and Jeremy Horwood from Australian firm Corrs Chambers Westgarth are advising Macarthur on the latest offer from Peabody, which has now partnered with ArcelorMittal, the world's largest steel company and owner of a 16.2 percent stake in Macarthur.

Macarthur acknowledged in a statement that it received the latest takeover offer and would pursue talks with Peabody and ArcelorMittal on the terms and price of the proposal. Martin Kriewaldt, a member of Macarthur's board, spent 20 years at a predecessor of one of Australia's largest law firms, Allens Arthur Robinson. Macarthur's top in-house lawyer is Lisa Dalton.

ArcelorMittal has turned to Mallesons Stephen Jaques M&A partners Greg Golding and David Friedlander on its offer for Macarthur. St. Louis-based Peabody is being advised by Freehills M&A partners Tony Damian and Andrew Rich in Sydney. Both companies claim their joint bid is an improvement over previous offers for Macarthur. ArcelorMittal is Macarthur's second-largest shareholder.

Luxembourg-based ArcelorMittal, itself the product of a $33.1 billion merger five years ago, is keen on acquiring Macarthur because the company is a key producer of pulverized coal, a key ingredient in making steel. Under the terms of the deal, ArcelorMittal would own 40 percent of Macarthur, while Peabody would own a 60 percent stake. Simon Evans serves as general counsel for ArcelorMittal. Lewis Kaden, a former Davis Polk & Wardwell partner and current vice-chairman at Citigroup, is a member of ArcelorMittal's board of directors.

Alexander Schoch serves as general counsel for Peabody, which operates about 30 mines throughout the United States and Australia. Former Shook, Hardy & Bacon of counsel Fredrick Palmer, last year named chairman of the World Coal Association, serves as Peabody's senior vice president for government relations.

Macarthur was founded by Ken Talbot, a mining magnate who died a year ago in a plane crash in the Congo, along with a prominent mining lawyer and executive John Carr-Gregg.

Any final deal for Macarthur will likely hinge on the approval of Beijing-based Citic, a conglomerate owned by the Chinese state that holds the largest stake in Macarthur at 24 percent, Bloomberg reports.

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