Following due diligence, Peabody and ArcelorMittal attempted to negotiate a bid implementation agreement (BIA) with Macarthur. However, Macarthur was not willing to engage on a BIA. A formal offer was submitted to Macarthur, valuing the company at $15.66 per share without a BIA while seeking a recommendation. The Macarthur board declined to recommend this offer.

Peabody Energy Chairman and CEO Greg Boyce said they decided to take this “attractive offer” directly to Macarthur shareholders. The offer represents a 41% premium to the closing price immediately before the approach was disclosed to the market, explained Aditya Mittal, CFO, ArcelorMittal.

Macarthur Coal is a leading producer of low-volatile PCI metallurgical coal with production and development assets in the Bowen Basin, Australia, including the Coppabella and Moorvale Joint Venture, Middlemount and Codrilla. It holds total coal reserves of 270 million metric tons (mt) and total resources of approximately 2.3 billion mt.

ArcelorMittal is the world’s leading integrated steel and mining company, with operations in more than 60 countries. In 2010, ArcelorMittal produced more than 90 million mt of crude steel, representing approximately 8% of world steel output. ArcelorMittal’s mining operations produced 47 million mt of iron ore and 7 million mt of metallurgical coal as well in 2010.