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Anglo seeks damages as Peabody pulls out of $3.8bn coal sale
(Sharecast News) - American coal miner Peabody has officially pulled out of the $3.8bn move to take over Anglo American's steelmaking coal business in Australia, blaming a contested 'material adverse change' to the deal first announced last November. The breakdown of the agreement follows a fire at the Moranbah North mine at the end of March, which Peabody claimed had materially changed the initial terms of the deal.
Peabody then announced in April that it was reviewing the deal, citing the MAC clause.
"The two companies did not reach a revised agreement to cure the MAC that compensated Peabody for the material and long-term impacts of the MAC on the most significant mine in the planned acquisition," Peabody's president and chief executive Jim Grech said in a statement.
Peabody shares jumped as much as 3% in early deals on Wall Street, but trimming gains to 0.8% by 0942 ET.
Anglo, which said it continues to make progress towards a "safe restart" of Moranbah North, reiterated on Tuesday that the fire did not constitute a MAC under the original agreement, given the absence of damage to the mine and equipment.
As a result, the company said it will soon start an "arbitration to seek damages for wrongful termination".
"Our view is supported by the lack of damage to the mine and equipment, as well as the substantial progress made with the regulator, our employees and the unions, and other stakeholders as part of the regulatory process towards a safe restart of the mine," said Anglo's CEO Duncan Wanblad.
"In fact, just in the last week we achieved a further important milestone, with our workforce signing off the risk assessment that underpins the restart strategy. We are therefore very disappointed that Peabody has decided not to complete the transaction."
Looking ahead, Wanblad said the company was confident that it would successfully conclude an alternative sales process for the assets "in due course" following the inbound interest received in recent months.
Anglo's share price was up 1.7% at 2,167p by 1447 BST.
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