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NEWS UPDATES 6 July 2010

Banpu eyes takeover of Australia's Centennial

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Banpu Plc, Asean's biggest coal producer, is preparing to take over Australia's Centennial Coal in a deal worth A$2 billion (54.47 billion baht), the biggest overseas deal by a Thai company, the Bangkok Post reports.

Somruedi Chaimongkol, chief financial officer at Banpu, said the deal was a big step in its strategy to extend its investment in the three most significant countries in the coal industry. "Centennial is the leader in thermal coal mining in Australia. It operates 15 million tonnes of production per year from three mines across the country," said Ms. Somruedi.

Australia is the world's biggest coal exporter, followed by China and Indonesia.

"It is part of our long-term strategy to make a presence in these three countries," she said. "The return on investment is also clear, as we have plans to raise coal prices soon, while Centennial has a lot of output."

Banpu has agreed to pay A$6.20 a share, 40 percent more than Centennial's closing price of A$4.42 last Friday. It intends to acquire at least 50% of the shares of the Sydney-based company, including an existing stake of 19.9%.

Achieving its minimum holding target of 50.1% will require about A$1.2 billion, while buying up all the shares would cost A$2 billion.

She denied analysts' earlier comments that the deal was triggered by Australia's decision last week to cut a new tax on mine profits from 40 percent to 30 percent after miners claimed it would cripple new investment.

Banpu's offer is priced at 11.16 times Centennial's earnings before interest, tax, depreciation and amortisation. That's almost double the 6.77 times EBITDA that Yanzhou Coal Mining Co paid when it won Australian government approval for its A$3.5-billion takeover of Felix Resources Ltd last year.

Coal prices have been rising this year in line with demand in Asia, climbing above $100 a tonne for the first time in May.

Banpu shares closed yesterday on the Stock Exchange of Thailand at 614 baht, up 12 baht, in trade worth 916 million baht.

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