Dead kangaroos

April 9, 2010


Noble Group, the Singapore-listed commodities trader involved in the pitched battle over Australia’s Macarthur Coal, has upped the stakes in takeover trash-talking. Noble had planned to take a stake in Macarthur, as part of a deal in which Macarthur would in turn acquire Gloucester Coal.  And so it was aghast when U.S. miner Peabody Coal made a counter-offer to buy Macarthur (others are now circling). Not for Noble the plain-vanilla rejection of an offer as “derisory” — or even a sly bit of blogging — but instead, a series of bracing statements via the Singapore stock exchange.

On Monday dead kangaroos were invoked:

“The board of Macarthur reacted to [Peabody's] bid with the same enthusiasm as a lost and hungry hiker who stumbles across a road kill Roo that had been in the sun too long, and not surprisingly said “no thanks”…

“Life was great until a few days ago when, instead of jumping on their horses, the Americans charged into town on a Gulfstream jet for the afternoon and plunked a bid down that was a great deal for them, and not, in our view, anywhere near what was already on the table. Hats off to them for being opportunistic and crafty; it ruined our Easter weekend.

“So, now, instead of looking for eggs with our kids, we have to draft this release and inform the market that the Noble Group will have to give long hard thought as to whether we will try to chase these chaps out of town by, among other things, exercising, if certain events occur, our option to increase our share of Middlemount mine to 50 percent, where we would have the right to sell 100 percent of the output for the life of the mine. It goes without saying the Middlemount mine would then have to be operated as a separate 50-50 joint-venture company. We will also have to give thought to other ways in which we would make the interlopers from St. Louis leave us alone. Our quiver is far from empty. What will they do if we also review our rights under the Monto project and act to protect our investment? For them, this transaction would make a Porcupine seem well-shaven.

“What we would really like is for the Americans to go back home. We busted our tail to put together a good fair deal that will build a great company. All they are doing is trying to throw a wrench in a well though-out deal with a check book and try and turn people’s heads with a short-term payoff.”

On Tuesday, Hamlet:

“It reminds us a bit of Shakespeare in Hamlet, Act 3, Scene 2,

“Peabody doth protest too much, methinks.”

“They went on and on and on, but in fact, it is quite simple:

“1. Take their cash if you don’t believe in the future of coal. Keep in mind, if they weren’t buying it cheap, even at 14 bucks a share, they wouldn’t be doing it. We believe that coal is in a once in a multi-decade bull run. So do Peabody, which is why they are trying to get you to give them a great coal operation for their rapidly depreciating dollars.

“2. If you believe in coal for the long-term, and want to stay in a company that intends to develop into the largest independent coal producer in Australia, vote for the Gloucester-Macarthur merger on Monday, April 12.”

Then, on Thursday, a short piece on why Peabody’s plan, with apparently preferential treatment for big shareholders, was not “fair dinkum”.

The Sydney Morning Herald, which hailed Noble’s approach as a breath of fresh air, says it comes straight from the pen of Richard Elman, chief executive of Noble Group (and on Forbes’s reckoning, Hong Kong’s 14th richest man). On the SMH’s account, the first release also “sent Noble’s Australian-based PR team into meltdown — the statement went directly to the Singapore Exchange without vetting from the spin doctors.”

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