Noble Offers $200 Million for Gloucester Coal Shares

By Jesse Riseborough and Luzi Ann Javier

Feb. 27 (Bloomberg) -- Noble Group Ltd., a Hong Kong-based commodity supplier, offered A$310 million ($200 million) in cash for the shares it doesn’t own in Australia’s Gloucester Coal Ltd. to thwart a rival bid for control from Whitehaven Coal Ltd.

Noble, owner of a 21.7 percent stake, offered A$4.85 a share for the rest of Sydney-based Gloucester, the company said today in a statement. That’s 22 percent more than the implied value of Gloucester’s shares under the Whitehaven transaction, based on yesterday’s close, according to Bloomberg calculations.

Whitehaven shareholders would control 67 percent of the merged company under the earlier proposal, which Noble said is a reverse takeover and undervalues the target. The Asian company in 2007 helped block a A$391 million takeover of Gloucester by Xstrata Plc, the world’s biggest exporter of power-station coal.

Noble “are obviously looking to preserve their interest and maybe have bigger plans for the group,” said Tom Sartor, a mining analyst at ABN Amro Morgans Ltd. “Whether Xstrata is in the mood to possibly enter the fray again I’m not sure. They’d be the logical one to come back and consider it.”

Gloucester rose 26 percent to A$4.91 at 2:33 p.m. Sydney time on the Australian stock exchange, as Noble fell 1.8 percent to S$1.07 in Singapore. Noble’s offer values Gloucester at A$396 million. Before today, the Australian company’s stock slumped 52 percent over the past 12 months.

‘Reasonable Price’

“It’s a reasonable price, given that Gloucester’s share price has fallen a lot,” said Nirgunan Tiruchelvam, an analyst at ABN Amro Asia Securities (Singapore) Pte. The acquisition “will increase Noble’s presence in the coal market. Long-term prospects for coal are very strong.”

Gloucester, being advised by UBS AG, told shareholders to take no action on the Noble bid pending a study of the proposal, according to a statement today. Gloucester offered 1 share for every 2.45 Whitehaven shares on Feb. 20. Noble’s stake in the combined company would fall to 7 percent should the takeover be completed, UBS AG said on Feb. 20.

“Noble’s offer creates competition for the control of Gloucester,” William Randall, a director of Noble’s energy unit, told reporters today on a conference call. “It’s important to note that our offer does not exclude other interested parties, including Whitehaven, from making a superior offer.”

Noble has approval from Australia’s Foreign Investment Review Board to gain 100 percent control of Gloucester, Randall said on the call. Noble also “has the funds available” for the bid, according to the statement.

‘Serious Concerns’

It will also lodge an application with Australia’s Takeover Panel today to “overturn the restrictive measures” in Gloucester’s agreement with Whitehaven, he said. Noble said Feb. 24 statement it has “serious concerns” about the agreement, saying the offer “prevents any possible contest for control.”

Whitehaven directors, representing 74 percent of the stock, plan to accept the Gloucester bid, according to a statement last week. Closely held U.S.-based mining investment company, AMCI Inc. holds 9.9 percent in Gloucester and 33 percent of Whitehaven, with both marketing coal for Gloucester.

Noble has not had any contact with Gloucester shareholders, Randall said. Gloucester Chief Executive Officer Rob Lord last week declined to comment on whether Noble was aware of the bid.

Gloucester yesterday reported a record first-half profit of A$44 million on gains in coal prices. It owns two mines in Australia’s Gloucester Basin, Stratford and Duralie. Noble said the same day that profit last year more than doubled to a record.

Noble is the largest customer of Gloucester, buying about 25 percent of its output, Randall said on the call.

Contract prices for energy coal more than doubled to a record last year as demand from Asia jumped and bottlenecks at Australian ports curbed supply growth. Prices may drop about 36 percent to $80 a ton for the year from April 1 on the deepening global recession, Merrill Lynch analysts led by Tom Price said in a Feb 9 report. That’s still the second-highest on record.

To contact the reporters on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net