Noble Raises Gloucester Bid to Thwart Rival Merger

By Jesse Riseborough and Madelene Pearson

May 5 (Bloomberg) -- Noble Group Ltd., a Hong Kong-based commodity supplier, raised its cash offer for Gloucester Coal Ltd. 24 percent, aiming to thwart a rival bid for control of the Australian producer.

Noble offered A$6 a share, valuing Sydney-based Gloucester at A$490 million ($363 million), the company said today in a statement. The increased offer is subject to Gloucester, in which Noble has a 21.7 percent stake, dropping an agreed merger with Whitehaven Coal Ltd.

Noble, whose holding may drop to 7 percent should the Whitehaven transaction proceed, wants control to maintain its share of marketing rights for Gloucester’s mines in Australia, the world’s biggest coal exporter. The Takeover Panel last week ruled that Gloucester must consider whether a rival offer is superior before proceeding with the merger with Whitehaven.

“Management will not be able to as easily jump towards the merger as the preferred option when you’ve got a cash bid,” Andrew Harrington, a mining analyst at Patersons Securities Ltd., with a “hold” rating on Gloucester, said today by phone from Sydney. “In essence, Noble really wants this off-take and some of that off-take might be put into doubt by the merger.”

Gloucester jumped 8 percent to A$5.84 at 12:01 p.m. Sydney time on the Australian stock exchange, its highest since Oct. 3. The company has a market value of A$478 million. Noble offered A$4.85 a share on Feb. 27.

‘Ticking Clock’

“The clock is ticking on the Whitehaven merger, and only the Gloucester directors have the ability to stop that clock,” Noble’s director of energy William Randall said in the statement. “We urge the Gloucester Board to act quickly to clear the path by recommending our offer and terminating the Whitehaven merger.”

This is the second time the Hong Kong-based company has fought to defend its stake in Gloucester after successfully defeating Xstrata Plc’s takeover bid in 2007.

Gloucester “is currently considering the proposal and will respond in due course,” the company said today in a statement. Shareholders should take no action pending a further announcement from Gloucester, it said.

Gloucester offered 1 share for every 2.45 Whitehaven shares on Feb. 20. The merger would give Whitehaven shareholders control of 67 percent of the company. Noble’s stake would fall to 7 percent should the takeover be completed, UBS AG said on Feb. 20.

UBS AG is advising Gloucester. Grant Samuel & Associates Pty and Wilson HTM Investment Group are advising Whitehaven. Whitehaven directors representing 74 percent of the stock back the merger proposal with Gloucester, it said Feb. 20.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net; Madelene Pearson in Melbourne on mpearson1@bloomberg.net