News On Merger's Completion Of Yanzhou Coal Mining And Australian Gloucester Coal

News On Merger's Completion Of Yanzhou Coal Mining And Australian Gloucester Coal

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Hong Kong-listed Chinese coal producer Yanzhou Coal Mining is set to take over Australian coal miner Gloucester Coal for AUD2.1 billion (USD2.13 billion). Under the agreement, Yanzhou Coals Australian unit Yancoal Australia will merge with the Australian Securities Exchange (ASX)-listed Gloucester Coal.

Yancoal Australia will acquire the entire issued share capital of Gloucester for which the latters shareholders can either choose to receive shares of the new merged entity (Yancoal Australia) or a combination of Yancoal Australia shares and contingent value rights (CVR) shares.

Upon the mergers completion, Yanzhou Coal will own 77 percent of the merged entity while the Gloucester existing shareholders will own 23 percent of the new company, which will continue to trade in the ASX. Gloucester shareholders will also get AUD3.2 in cash per share in the form of special dividend, payable prior to the effective date of the merger as well as capital return of about AUD2.64 per share payable six months after the mergers implementation.

The takeover is subject to the approval of Gloucester and Yanzhou shareholders as well as regulatory approvals in Hong Kong, China and Australia.

Singapore-listed Noble Group, currently the controlling shareholder of Gloucester with 64.5 percent equity, has backed the takeover offer. The company said it intends to vote for the proposed merger subject to approval by the Noble board of directors and in the absence of a superior proposal, and would elect to receive all ordinary shares as the consideration not including any CVR shares.

The cash component will crystallize a significant portion of the value in Gloucester shares, while also allowing Gloucester shareholders to retain an ongoing interest in the combined Gloucester and Yancoal assets, Noble said in a statement. The commodity supply chain manger intends to hold its shares in the combined entity for value accretion, expecting the merged entity to have significant cash flow generation that should underpin a progressive dividend policy.

The merged group will have 11 operating mines in New South Wales and Queensland in Australia.

Citi, Goldman Sachs and UBS are advising Yanzhou Coal; Lazard is advising Gloucester and the Blackstone Group is advising Noble.


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