I'LL HAVE A BIG MAC TOO, THANKS

Ky Chow, Sky News Business Reporter

12 April 2010

You can't write a blog post about the global battle for PCI coal baron Macarthur Coal without mentioning gems like the press releases from Noble Group (which owns 87% of Gloucester Coal, and hopes to end up owning 24% of Macarthur after it swallows the rest of Gloucester).

For those who missed it - (and face it, even if you didn't, it's such a great read), here are just a few lines from the "original and the best" release that popped up when Peabody lobbed in their (first) last minute takeover bid for Macarthur:

"The board of Macarthur reacted to their bid with the same enthusiasm as a lost and hungry hiker who stumbles across a road kill Roo that had been in the sun too long, and not surprisingly said "no thanks"..."Life was great until a few days ago when, instead of jumping on their horses, the Americans charged into town on a Gulfstream jet for the afternoon and plunked a bid down that was a great deal for them, and not, in our view, anywhere near what was already on the table. Hats off to them for being opportunistic and crafty; it ruined our Easter weekend. So, now, instead of looking for eggs with our kids, we have to draft this release and inform the market that the Noble Group will have to give long hard thought as to whether we will try to chase these chaps out of town...". And then they ended it with an anecdote about Kerry Packer staring down a challenge from an American "interloper".

Late Friday night, after rejecting a bid from Aussie New Hope (why should foreigners have all the fun in gunning for one of the last chunky-sized coal mine targets in this lucrative China region?), Macarthur suddenly announced that at least some Swiss decided they were done being boringly neutral, with Xstrata successfully convincing one of the major shareholders (probably UK-based ArcelorMittal) that they should delay the Monday EGM to vote on the Gloucester takeover that Noble wants (which is opposed in the bids of not only those Gulfstream-ridin' interlopers, but New Hope too). As of Monday, Xstrata still hasn't piped up yet, says Macarthur - but they've got a week.

So Noble put out another slightly less colourful but very casual release simply titled "Exasperated", saying "We just don't get it. The boards of both Macarthur and Gloucester support the Gloucester-Macarthur merger. And, wait for this……… [yes, Noble actually put in nine dots, and yes, I actually counted them] So do the three largest shareholders of Macarthur, and so does the single largest shareholder of Gloucester." Noble went on to say they felt like "chumps" for putting out a straightforward (rather than conditonal) big, Though sadly resisted the temptation to include some metaphors about Swiss cheese and yodelling. Things must be getting serious.

Getting back to the state of play, there are still some rumours that CITIC - the Chinese company which is also Macarthur's biggest shareholder - might decide to jump in with a bid as well, which would be another fine application of the time-honoured technique of waiting till the last minute before trying to throw in a killer gazumping bid at an auction.

Not that it's worked out for Peabody and Newhope - not at $14 or $14.58 respectively, anyway. Last week the Fin was reporting Xstrata is dangling some of their own coal assets in front of Macarthur's biggest owners (which include not just CITIC and ArcelorMittal, but also Korea's Posco).

Analysts I've spoken to see Macarthur as one of the last opportunities for coal companies to nab something close to China, and with the bonus of a stable government, and also that produces the slightly "cleaner" and easier PCI coal of which Macarthur is the biggest exporter. And that's probably why, in Noble's words, the Macarthur board is, and will continue to be, "bombarded by everyone in the world with the exception of three coal companies in Mongolia." Which is a shame, because we'd all love to see Noble's shot at some great Genghis Khan barbarian gags.

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