Universal Coal shares climb on formal $183m takeover bid
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The consortium of investors that has been eyeing thriving coal miner Universal Coal has now tabled a formal $183 million offer — which sent shares up as much as 10 per cent this morning.
The company (ASX:UNV) told investors today that it had now received a binding, conditional commitment to make an offer of 35c cash per share – which values Universal at a nearly 17 per cent premium to its share price the day before it received the initial offer in September.
The offer is from a consortium of investors led by Ata Resources — a private entity incorporated in South Africa.
The proposal, however, is still conditional upon the negotiation and execution of a transaction implementation agreement between Universal and the consortium.
The formal commitment comes after Ata Resources received promises from a second major shareholder of Universal that it would be accepting the offer.
Coal Development Holding, which has a 27.5 per cent stake and Ichor Coal, which owns 29 per cent have both agreed to vote in favour of the deal.
Between the two shareholders they have four directors on the eight-director board.
This latest offer is the third approach Universal has received, and boss Tony Weber told Stockhead last week that the company is “significantly undervalued” relative to its Aussie peers because its mines are in South Africa.
“[The offer] is a premium to the share price, but you look at the cash we’ve been generating relative to other Australian companies – you see it is a significant discount to what an entity generating this kind of cash would be achieving if it was operating in Australia,” Mr Weber said.
The company reported a record 800 per cent profit increase to $35.9 million for FY18 and it is still expanding.
Universal announced earlier this year it was picking up a third producing coal mine in South Africa and expects that to boost its production from January next year once the deal is finalised.
The company sold 4.7 million tonnes of coal in FY18 — a 57 per cent improvement over the prior year — and it forecasts it will produce 6 million tonnes this financial year.
Earnings before interest, taxes, depreciation and amortisation for FY19 is predicted to climb 29 per cent to $93 million.
Universal’s goal is to grow its output to over 8 million tonnes next year and over 10 million tonnes the year after.
If the takeover goes ahead, Universal will be delisted from the ASX.