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Yancoal repels potential $1.8b takeover


Yancoal made headlines last week after its majority shareholder, Yankuang Energy Group Company, announced it was mulling a $1.8 billion bid to acquire the remaining stake in the coal miner.

In documents filed with the Hong Kong stock exchange, Yankuang said it was considering a $US3.60 ($5.07) per share bid for Yancoal, to be satisfied through the issuance of convertible bonds. This would potentially result in Yancoal’s delisting from the Hong Kong stock exchange and/or the ASX.

On Monday, Yancoal said it received an unsigned, non-binding expression of interest regarding the potential transaction on April 29 but affirmed there was no certainty the proposal would proceed and advised its shareholders to take no action.

“The Yancoal board has appointed an independent board committee (IBC) to evaluate and respond to the potential transaction and, to the extent required, to make a recommendation to the independent shareholders of Yancoal,” the company said in a statement.

The IBC comprises all non-executive directors who do not have any direct or indirect interest in the potential transaction, other than as a Yancoal shareholder. Yancoal said the IBC had engaged Yankuang to clarify the proposal.

“Since its establishment, the IBC has corresponded with Yankuang Energy seeking clarifications and additional information in relation to the potential transaction, including to better understand how Yankuang Energy has assessed the value of Yancoal,” Yancoal said.

Yancoal said it would query why Yankuang had valued the coal miner at a discount to the prevailing trading prices on the ASX and the Hong Kong stock exchange.

The $US3.60-per-share bid reflects a 14.49 per cent discount to Yancoal’s last closing price of $HK33.05 ($US4.21) on the Hong Kong stock exchange on May 25.

Yancoal said the IBC would continue to evaluate the potential transaction in light of the clarifications provided by Yankuang and would update its shareholders in due course.

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