ArcelorMittal, the world’s largest steelmaker and the “Pacman” of the steel world, kicks off the week at the centre of bid speculation over Australian coal producer Macarthur Coal, after Macarthur’s largest shareholder, Ken Talbot, resigned as a director after selling part of his stake to ArcelorMittal.
Talbot’s resignation has triggered speculation that the Luxembourg-based company may shortly launch a bid for the A$4.4bn ($4.2bn) company, after buying a stake of just under 15 per cent last month.
Steelmakers are on a new drive for self-sufficiency, having watched aghast as iron ore producers ratcheted up prices. Lakshmi Mittal, for one, seems determined the same won’t happen with supplies of coking coal. The Chinese are also on Mittal’s wave length and Citic Resources, Macarthur’s second-largest shareholder, could be interested in increasing its stake in the Australian coal producer, although BusinessSpectator, the Australian blog, earlier this month quoted Citic chief executive Sun Xinguo saying the company had not decided what to do with its 17.66 per cent stake in Macarthur and could sell or hold it. We’d say it’s unlikely, though, that it will selel to rival ArcelorMittal.
Bloomberg reports that Talbot, who sold a 4.3 per cent stake to ArcelorMittal last month, said he resigned to “avoid any conflict of interest in dealing with” his remaining 19.76 per cent holding. Macarthur, the world’s biggest exporter of pulverised coal, halted trading of its shares pending the outcome of the talks with ArcelorMittal. Pulverised coal is used by steelmakers as a cheaper alternative to coking coal.
ArcelorMittal may “come out and make a full bid for the company,” Tom Sartor, a mining analyst at ABN Amro Morgans, told Bloomberg, adding that it was unlikely there will be a counter bidder.
ArcelorMittal, which meets just one-sixth of its own coal requirement, last month agreed to pay A$631m ($606m) for a 14.9 per cent stake in Macarthur and might also target US companies, the FT reported last month.
All great news for the share price, as Bloomberg noted. Macarthur has jumped 56 per cent in Sydney trading since it said on April 21 it had been approached about a takeover. It rose 6 cents, or 0.3 percent, to A$20.73 on June 20, giving it a market value of A$4.4bn.