Bloomberg reported that New World Resources NV, bidding USD 1.2 billion for Polish energy coal producer Lubelski Wegiel Bogdanka SA is studying further acquisitions in the region as it seeks to create Europe’s biggest coal mining company.
Mr Mike Salamon chairman of Amsterdam based NWR said that “In both Poland and the Ukraine there’s an almost inevitable trend towards further privatization. The company is interested in Polish state owned coking coal miner Jastrzebska Spolka Weglowa SA or JSW which plans to sell shares in an initial public offering next year”.
NWR bid for Bogdanka last month to add coal mines in Poland to its operations in the Czech Republic and create a regional champion. Mr Miroslaw Taras CEO of Bogdanka rejected the offer and this week said he’d prefer a rival merger with JSW, a company Mr Salamon believes lacks the necessary funds.
Mr Salamon said that I don’t think they have the firepower, whereas this is a cash bid. It would be very interesting to work out the norms of a state-owned company buying out a recently privatized company.
NWR is seeking acceptances from Bogdanka shareholders for its PLN 100.75 per share bid which is scheduled to close on November 29. Bogdanka rose 1.5% to PLN 107.7 in Warsaw trading yesterday. The offer represents 13% premium to the closing price before the bid was announced. NWR is more likely to lower the threshold for acceptances from 75% approval to gain control, rather than raise its bid.
Mining companies are returning to mergers and acquisitions as the global economic recovery boosts demand for commodities, raising prices and swelling cash reserves. Commodities companies have announced USD 420 billion of M&A deals so far this year.
Mr Salamon said that NWR first sold shares to the public in 2008 as it sought to become a regional consolidator. We felt that there was room for a serious mining business in the region. The subsequent financial crisis stalled those plans until the second quarter of this year when NWR decided to pursue Bogdanka.
He said that Bogdanka is worth more than NWR bid according to Polish pension fund Aviva Powszechne Towarzys two Emerytalne SA whose 15% stake makes it Bogdanka’s biggest single shareholder and Amplico Powszechne Towarzystwo Emerytalne SA, a rival fund holding 5.1%. NWR is in robust talks with those holders.
(Sourced from Bloomberg)
