Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines Report

Insight 15 June 2017

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Report summary

Glencore announced on June 9, 2017 that it had submitted a proposal for the acquisition of Rio Tinto's interest in NSW thermal and semi-soft coking coal producing mines - Hunter Valley Operations (HVO), Mt Thorley and Warkworth. Glencore has also agreed to purchase Mitsubishi's stakes in HVO and Warkworth. Glencore's offer for the Rio Tinto and Mitsubishi stakes in the assets is US$3.5b, which exceeds Yancoal's combined offer of US$3.4b for the same assets (assuming it accepts Mitsubishi's US$230m offer for its stake in Warkworth). However, under the terms of the January 2017 agreement between Yancoal and Rio Tinto, Yancoal has the right to make a counter bid to Rio Tinto and we understand that Glencore could then also revise its offer.

Deal Summary
- Key facts
Deal Analysis
Valuation summary and bid comparison
- Deal implied long-term (adjusted) benchmark thermal coal prices vs. Newcastle export thermal coal spot price (6,000 nar)
Strategic rationale
- Map of Glencore and Rio Tinto's Hunter Valley coal operations and projects

Tables and charts

This report includes the following images and tables:

Valuation summary
Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines: Image 1
Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines: Image 2

Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines: Table 1
Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines: Image 3
Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines: Image 4
Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines: Image 5
Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines: Image 6
Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines: Image 7
Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines: Image 8
Economic assumptions

What's included

This report contains:

Glencore impedes Yancoal deal with US$3-5 billion bid for Hunter Valley coal mines.xls

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Glencore outbids Yancoal with US$3.5b offer for Hunter Valley coal mines

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