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Thursday, December 22, 2011

China's Yanzhou inks A$700 mln deal for Gloucester Coal

Thu Dec 22, 2011

* Yanzhou says to merge Australian unit with Gloucester Coal
* Deal worth A$700 million in cash, or A$3.20 per share - Yancoal
* Reverse takeover creates one of largest coal companies in Australia

SYDNEY/HONG KONG, Dec 22 (Reuters) - China's Yanzhou Coal Mining Co Ltd said on Thursday it plans to merge its Australian unit with Gloucester Coal in a A$700 million deal that will create one of Australia's largest listed coal companies.

Australia's coal sector has seen a series of mergers and acquisitions initiated by Asian suitors hungry to satisfy fast growing domestic demand for coal from steel mills and power generation plants.

Yanzhou Coal's deal for Gloucester is also yet another case of a Chinese company buying up natural resource assets in Australia, tapping its commodity base to fuel massive residential, commercial and infrastructure projects across China.

Sydney-based Gloucester will be merged with Yancoal Australia Ltd., and Yanzhou will own 77 percent of the new company. Gloucester shareholders will own the rest and receive A$700 million ($705.36 million) in cash, the equivalent of A$3.20 in per share, Yancoal said in a statement. Each Gloucester Coal shareholder will receive one share in the merged company.

Gloucester closed at A$7.03 in Sydney on Dec. 19, before trading in the shares was suspended.

The reverse takeover of Gloucester would give Yanzhou Coal's Australian unit, Yancoal Australia Ltd, a local listing without having to risk an initial public offering in a shaky market, where coal stocks in particular have been pummelled on worries about a global economic downturn.

A condition of Yancoal's A$3.3 billion takeover of another Australian coal miner, Felix Resources, in 2009 required it to float at least 30 percent of the business on the local exchange by 2012.

Yanzhou Coal chairman Li Weimin said in a statement the merger plan allows it to meet that requirement and at the same time "reflects the company's strategy to grow our Australia business and to become a global leader in the coal mining sector."

Gloucester, which has a market value of A$1.4 billion, is 64 percent owned by commodities trader Noble Group. Trading in the coal firm's shares were suspended earlier Thursday ahead of the expected offer.

Yanzhou said the transaction is subject to various approvals, and plans to complete the deal in the second quarter of 2012.

Yancoal and Gloucester both have mines and projects in New South Wales and Queensland. Gloucester aims to expand production to 10 million tonnes a year by 2016, while Yancoal expects to produce 20 million tonnes a year by 2015.

That would put a combined group ahead of Whitehaven Coal , which last week announced a $2.5 billion takeover of Aston Resources to create a company producing 25 million tonnes a year by 2016.

Since taking over Felix Resources, Yancoal has bought Syntech Resources for A$203 million and is about to complete the A$297 million acquisition of Premier Coal from Wesfarmers.

It sought to buy Whitehaven Coal earlier this year but the two were unable to settle on a price.

(sourced Reuters)

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