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6 July 2006 -- U.S. coal company Peabody Energy announced that it has signed a merger implementation agreement to acquire the Australian company Excel Coal Limited. Under the terms of the agreement, Peabody will pay $6.21 per share in cash for all outstanding shares, representing a total acquisition price of approximately $1.34 billion plus assumed debt of approximately $190 million.
Peabody Energy is one of the world's largest private-sector coal companies, and Excel Coal is one of the largest independent coal companies in Australia.
Peabody Energy cited positive statistical forecasts in its Australian investment. Peabody reported that nearly one-third of the world's coal exports come from Australia, and the U.S. Energy Information Administration projects that Australian coal exports are expected to increase 55 percent by 2030. Australian metallurgical and thermal coal serves the fast-growing Asian markets that will account for the majority of growth in the global coal industry in coming decades.
Peabody currently produces 9 million tons of mostly metallurgical coal per year in Queensland. The purchase provides Peabody with growth opportunities from its core operations, along with major metallurgical and thermal coal mines in the latter stages of development by Excel Coal. Excel produced approximately 5.6 million tons of coal in calendar year 2005. Excel operations are expected to produce up to 15 million tons in calendar year 2007, and up to 20 million tons per year in 2008, from coal mines in New South Wales and Queensland. The transaction also provides substantial synergies in the areas of sales and trading, and reserve holdings in Queensland near existing Peabody operations. Excel has more than 500 million tons of metallurgical and thermal coal reserves.
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