The billion dollar foreign takeovers of Australian assets keep pouring
in. Today’s effort is a $1.83 billion bid for Excel Coal by St
Louis-based Peabody Energy, a $20 billion company which supplies 3% of
the world’s energy resources.

Australia is the world’s biggest coal exporter and this American energy
giant is keen to buy into the Excel growth story, which will see annual
production from its NSW and Queensland mines soar from 5.6 million
tonnes in 2005 to as much as 20 million tonnes by 2009.

However, Excel has struggled to implement its growth strategy with some
operational and profit setbacks in recent months, so the board has
agreed to virtually no takeover premium. Excel shares closed at $8.40
yesterday, but the cash takeover is only pitched at $8.50, although
there does seem to be another profit warning of sorts today.

The stock is up 22c to $8.62 in morning trade so the market doesn’t
anticipate much of a bidding war, which probably reflects the fact that
chairman Roger Massey-Green and managing director Anthony Haggarty own
20% of the stock between then and will share in a tidy $360 million as
they cement spots on the Rich List.

Excel was only floated at $2 a share in May 2004, so it’s been a great
run for investors. The whole enterprise is being valued at $2.1
billion, if you include about $250 million in debt.

Today’s deal is a good excuse to fire up our list tracking who owns our major resource projects, because it is now approaching 90% foreign ownership with this latest takeover.

The wires are all over the story, although the American perspective is different from the local spin.
The other major foreign takeovers so far this year include KKR snapping up
Cleanaway for $1.82 billion, Newbridge Capital buying Myer for $1.4
billion and Nestle picking up Uncle Tobys for $890 million.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey