Peabody extends $5 billion bid for Australian Macarthur

Fri Nov 11, 2011 12:28pm EST

(Reuters) - U.S. coal giant Peabody Energy Corp (BTU.N) extended its $5 billion bid for Australia's Macarthur Coal Ltd MCC.AX by two weeks after failing to reach the 90 percent threshold for acceptances by its Friday deadline.

The A$16 per share bid will now expire on November 25, Peabody said in a statement in Sydney. The offer rises to A$16.25 if more than 90 percent of Macarthur's shares are tendered.

According to a notice from Macarthur on Friday morning, Peabody has gained around 85 percent of shareholder acceptance.

South Korean steelmaker POSCO (005490.KS), which owns a 7.25 percent stake, is the last remaining major holdout after major shareholder China's Citic accepted the bid in October.

St. Louis-based Peabody gave no further explanation and a company spokesman did not immediately respond to a Reuters request for more information.

The company's shares were almost 2 percent higher, at $40.83, in afternoon trading on the New York Stock Exchange.

Analyst Bill Burns, of Johnson Rice & Co, said he did not interpret the extension as a red flag, or a signal that the deal was in jeopardy.

"They basically want a majority stake and if they get 90 percent they will have to pay a higher price," he said.

"They were able to easily raise money," he said, noting that Peabody sold $3.1 billion of senior notes this week in a private placement market.

Peabody said it intends to use the net proceeds from the sale of the notes, together with other sources of financing, to fund the Macarthur acquisition.

Peabody's former partner in the bid, ArcelorMittal (ISPA.AS), last month pulled out of the deal as a global equities rout hit coal stocks and made the Macarthur premium harder to justify.

The acquisition of Macarthur will give it control of the world's top producer of pulverized coal, at a time when demand for steel-making materials holds up in Australia's key coal market, China.

(Reporting by Lincoln Feast in Sydney and Steve James in New York; Editing by Miyoung Kim, Phil Berlowitz)

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