Peabody (NYSE: BTU) has announced its acquisition of world-class steelmaking coal assets from Anglo American PLC, positioning the company as a leading global seaborne metallurgical coal producer with tier 1 mines near the world’s strongest steel markets. The transaction will see Peabody pay cash of $2,320 million, comprised of $1,695 million at closing and deferred payments of $625 million payable in four annual installments starting from the first anniversary of the completion date. Additionally, there are further contingent payments of up to $1.0 billion, subject to potential favorable future events.
The acquisition includes four metallurgical coal mines – Moranbah North, Grosvenor, Aquila, and Capcoal – located in Australia’s Bowen Basin, known for the world’s highest-quality steelmaking coal. Approximately 80 percent of the mines’ output is hard coking coal. The acquired mines have an average mine life greater than 20 years with 306 million tons of marketable reserves and an additional 1.7 billion tons of coal resources. This acquisition is expected to transform Peabody’s metallurgical coal segment, increasing metallurgical coal production from an estimated 7.4 million tons in 2024 to an expected 21 – 22 million tons in 2026.
The acquisition is expected to result in several strategic and financial benefits for Peabody. It will increase exposure to premium hard coking coal and key high-growth markets, create opportunities to capture substantial synergies, enhance margins and through-the-cycle performance, bolster Peabody’s attractive financial profile, and accelerate the company’s sustainability and emission target ambitions.
The transaction is contingent on regulatory approvals, clearance of pre-emption rights by minority partners of the assets, and other customary closing conditions. Peabody has secured a bridge facility commitment to finance the acquisition and intends to obtain permanent financing in lieu of borrowing under the bridge facility, targeting a debt-to-EBITDA ratio ceiling of approximately 1.5x.
The company will host a conference call and webcast to discuss the acquisition. Advisors for the transaction include Moelis & Company LLC, Ma Moelis Australia, Jefferies, Jones Day, and Wachtell, Lipton, Rosen & Katz.
This acquisition reinforces Peabody’s position as a leading coal producer with a commitment to sustainability and shapes its strategy for the future. For further information about the acquisition and Peabody, visit www.peabodyenergy.com. Following these announcements, the company's shares moved -4.5%, and are now trading at a price of $26.16. If you want to know more, read the company's complete 8-K report here.
