Whitehaven Shares Jump 18.5% on Takeover Bid

Shares of Whitehaven Coal Ltd. (WHV: ASX) responded positively to news of a A$5.3 billion ($5.4 billion) takeover bid by a consortium led by Australian billionaire Nathan Tinkler.

On Friday, the Tinkler Group Pty. Ltd. offered to acquire Whitehaven Coal Ltd. at AU$5.20 (US$5.29) per share, at least a 51 per cent premium over the weekend's close of the coal miner. 

As of 1111 AEST, the shares of the mining company were 64 cents, up 18.55 per cent, at $4.09. On Friday, Whitehaven Coal Ltd. closed at $3.45, eight cents down on the day and nearing a three-year low. Shares traded as high as A$6.50 last year, according to Reuters News.

Friday's offer came four weeks after Australia's no.2 independent coal miner rejected a nonbinding proposal from the Tinkler group.

Tinkler Group Pty. Ltd.'s A$5.3 billion ($5.4 billion) takeover offer has been reasonable, according to Tony Haggarty, Whitehaven Coal Ltd, in a report by The Australian Financial Review.

"I think the proposal is reasonable in the circumstances," Mr Haggarty said. "I think our shareholders would want us to give it our consideration."

But the offer has been viewed with much "skepticism" since it is conditional, subject to a committed funding package and in need of fresh equity, Reuters News reported, citing observations by analyst Jason Beddow.

"We'll have to wait and see whether it's a legit bid first," he said.

Tinkler Group Pty. Ltd. controls Whitehaven Coal Ltd. by already 21.4 per cent. Based in New South Wales, the latter operates and manages development projects in the Gunnedah Basin and Hunter Valley as well as Queensland.

However, it has many undeveloped coal mines.

"This proposal is clearly not without risks," Nomura Australia Ltd. said in an e-mailed note.

"The potential for a competing offer is viewed as low and, due to the conditional proposal, shares are likely to trade at a discount to the offer."

"The key to this bid is Tinkler securing debt funding," analyst Andrew Driscoll said inn Bloomberg News. "He knows the assets very well and would have confidence around the valuation. Companies that have good quality assets and good growth profiles are still very attractive investment propositions."

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