25th Nov 2024 09:28
(Alliance News) - Anglo American PLC on Monday said it has struck a deal to sell the remainder of its coal business as it continues progressing its new strategy set out in May to focus on copper, iron ore, and crop nutrients.
The FTSE 100-listed miner said it has entered into a definitive agreement with St Louis, Missouri-based Peabody Energy Corp to sell its remaining steelmaking coal portfolio which will see Anglo receive up to USD3.78 billion.
Anglo shares were up 1.4% at 2,391.00 pence on Monday morning in London, giving the firm a market capitalisation of GBP32.12 billion. Peabody shares were up 0.4% to USD27.51 in the New York pre-market for a USD3.45 billion market cap.
As part of the transaction, Peabody is set to pay USD2.05 billion upfront in cash, plus a deferred cash consideration of USD725 million. There is the potential for up to a further USD550 million in a price-linked earnout and another possible USD450 million tied to the reopening of Grosvenor mine in Queensland, Australia.
Production at Grosvenor was suspended by Anglo-American in June following an underground coal gas ignition incident late that month.
Coupled with the previously announced USD1.1 billion sale of its roughly 33% interest in joint venture Jellinbah Group Pty Ltd, Anglo-American expects to receive approximately USD4.9 billion through the disposal of its steelmaking coal business.
This transaction continues the London-based diversified miner's new strategy aimed at divesting some assets, including Anglo American Platinum Ltd and De Beers.
In May, to fend off an unwanted takeover approach from Australian peer BHP Group Ltd, Anglo announced "a number of major structural changes", including portfolio simplification.
Anglo American Chief Executive Duncan Wanblad said: "The sale of our steelmaking coal business is another important step towards delivering the strategy that we set out in May to create a world class copper, premium iron ore, and crop nutrients business.
"All the transactions to deliver our portfolio transformation are well in train - the demerger of Anglo American Platinum is expected by mid-2025 and we have seen strong interest in our nickel business with the sale process well progressed. We expect De Beers to follow, recognising its unmatched industry and brand position and good progress in working with stakeholders to position the business for long term success as we work toward separation for value.
"We are well progressed with the delivery of USD1 billion of cost savings and have detailed plans in place to deliver at least an additional USD800 million in pre-tax recurring cost benefits on a run-rate basis from the end of 2025 as we progress the portfolio transformation."
By Christopher Ward, Alliance News reporter
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