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M&A - Europe

UPDATE 2-Rothschild's Vallar, Bakrie team up on Indonesia coal

   * Bakrie to own Vallar majority stake through Bumi share
swap
 * Bakrie gains control of Berau Coal through Vallar
 * Move cements Bakrie's leading position in Indonesia coal
 * Bakrie & Bros shares up 5 pct, Bumi up 2 pct vs flat mkt
 (Recasts, updates with details, quote)
 By Eric Onstad and Janeman Latul
 LONDON/JAKARTA, Nov 16 (Reuters) - Indonesia's powerful
Bakrie family has joined forces with the Rothschild banking
dynasty to cement its dominance of Indonesia's booming coal
sector, announcing a deal that will combine stakes in three
companies and list in London.
 Bakrie Group, run by the family of politician and tycoon
Aburizal Bakrie, is joining miner Berau Coal BRAU.JK with
prize asset PT Bumi Resources BUMI.JK in a share swap deal
with Vallar VAAR.L, the mining investment fund established by
financier Nathaniel Rothschild earlier this year.
 Bakrie will gain majority control of London-listed Vallar
and rename it Bumi Plc, a symbol of a move that means
Indonesia's biggest coal producer gains a greater share of the
global market.
 "This is a reverse takeover where the Bakrie Group is
regrouping its coal mining assets," said Norico Gaman, the head
of research at Jakarta brokerage PT BNI Securities. "Vallar is
only a vehicle for the Bakrie Group to consolidate its assets."
 "Bumi is now aiming to become one of the biggest global
players in the coal industry," Gaman added.
 As part of the deal, Vallar will pay $3 billion in cash and
new shares to buy a 75 percent stake in Berau and 25 percent of
Bumi in its first deal since raising $1.1 billion and listing
in July.
 "We've announced the creation of an Indonesian coal
champion... (that) is going to be the largest supplier of
thermal coal to China," Vallar co-founder Nathaniel Rothschild
told a conference call in London.
 "This is a business that by 2013 should produce 140 million
tonnes of coal a year."
 Bakrie Group will own 43 percent of Bumi Plc, while 28.3
percent will be owned by exisiting Vallar ordinary
shareholders.
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 For a graphic on Indonesian coal, please click on:
 link.reuters.com/men65q
 For risks in Indonesia, see: r.reuters.com/pyt92n
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 Bakrie & Bros BNBR.JK, the holding firm for Bakrie Group,
said on Tuesday it swapped 5.2 billion shares in Bumi at 2,500
rupiah a share, or a 2 percent discount to Bumi's closing price
on Monday, for new shares in Vallar.
 Bakrie & Bros said in a statement it will control
management appointments for both Bumi and Vallar.
 Bumi already controls 10 percent of the global thermal coal
market, while Berau is the fifth biggest coal firm by output in
the world's largest exporter of thermal coal, which is seeing
growing demand from utilities in India and China.
 Shares in Bakrie & Bros closed 5.3 percent higher, while
Bumi and Berau both rose 2 percent, to outperform a broader
Jakarta market .JKSE up 0.5 percent.
 Credit Suisse CSGN.VX was Bakrie's sole adviser for the
deal.
  (Reporting by Eric Onstad in London and Janeman Latul in
Jakarta; Writing by Neil Chatterjee; Editing by Lincoln Feast)
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