December 02, 2008

Noble opposes Xstrata offer for Gloucester

Hong Kong based commodities trader Noble Group Ltd, after doubling its stake in Gloucester Coal Ltd to 10.4% in a statement to the Singapore Stock Exchange that Xstrata's AUD 4.75 a share offer undervalued Gloucester due to a structural shift in coal markets, which reflects higher thermal coal and coking coal prices. Noble said it was considering a number of strategic options and added it would seek discussions with Gloucester's board.

The timing of those potential discussions is unclear, given Gloucester is subject to no talk and no shop clauses as part of its friendly deal with Xstrata. Gloucester shareholders are set to vote on Xstrata's proposed scheme of arrangement deal this next week. If the deal failed, Gloucester would be forced to pay an AUD 3.91 million break fee to Xstrata, which represents nearly 25% of the NSW miner's forecast profits for 2007.

Noble paid AUD 21.5 million for 4.4 million shares for Gloucester, taking its stake to 8.2 million shares and making it the largest shareholder.