Whitehaven Coal will buy billionaire Nathan Tinkler’s Aston Resources to form Australia’s largest independent coal company worth $5.1 billion.
The takeover, which values Aston at about $2.25 billion, will tip the production balance in favour of higher priced metallurgical coal, ahead of Whitehaven’s thermal coal, making it a more attractive investment option.
The merger will also increase Whitehaven’s presence in the NSW Gunnedah Basin, allowing the company to better utilise resources, personnel and infrastructure.
“It will have a very powerful position in the Gunnedah Basin, an area where the coal quality and quantity is such that it will be an increasingly important part of the coal business,” Whitehaven chief executive Tony Haggarty said.
The company aims to quadruple annual production to 25 million tonnes of coal by 2016, from the 2012 estimate of 6 million tonnes.
The merged miner would have high quality producing mines, major development projects and attractive exploration assets, Whitehaven chairman John Conde said.
“This asset base, combined with the positive long term outlook for Australian export coal, places the merged entity in an excellent position,” he said in a statement on Monday.
Grant Craighead, managing director of analyst firm Stock Resource, said he thought the merger was a “win-win” for shareholders at a time when there was a shortage of pure coal miners.
“Once you’ve got multiple operations in one area you’ve really got potential for savings in terms of personnel, equipment, maintenance, negotiating with rail, the port … all those things fall into place,” he told AAP.
He added that there were benefits in bringing together Whitehaven’s experienced management with Aston, which was still in the development stage.
Shares in Aston added 1.4 per cent to $9.90 while Whitehaven declined 1.4 per cent to $5.74.
Mr Tinkler, the 35-year-old who is Australia’s youngest billionaire, owns 32 per cent of Aston but has opted not to be on the new company’s board, according to Aston deputy chairman Mark Vaile.
The takeover values Mr Tinkler’s holding at about $720 million.
Whitehaven has also proposed to buy another Tinkler-owned coal company, Boardwalk Resources, as long as the Aston deal goes ahead.
Some analysts questioned the timing of the deal, given the recent depressed share price for Whitehaven, but its chief Tony Haggarty said there was no guarantee such a deal would again be available.
Questions were also raised about the value for Aston shareholders, with the implied price of $10.05 well below the $10.75 it traded at when Mr Tinkler took it over last month.
However, Mr Vaile described it as an “exciting proposition … and once in a lifetime opportunity”.
It might be a more attractive takeover target now, following the merger announced on Monday, Mr Craighead said.
Aston shareholders will receive 1.89 Whitehaven shares for each Aston share.
Whitehaven shareholders would receive a special dividend of 50 cents per share prior to the merger transaction.
The two companies’ boards have unanimously recommended the merger to shareholders.
