COAL PlayED - Another Day, Another T - O !

Another Day, Another gigantic Takeover in the COAL space. This time the deal's worth about $14 BILLION ! The Canadian Acquirer is Teck Cominco (TCK) and the Target is Fording Canadian Coal Trust (FDG). The deal's PREMIUM is only 12% but that's of course on TOP of Fording's year over year and year to date stock price appreciation of 180% and 130%, respectively.

bloomberg.com/apps/news

* Per Bloomberg, while the worldwide bear market slowed mergers and acquisitions activity by 35% in the first half of the year, Takeovers of Energy and Mining companies jumped 33% DESPITE record high prices for both Coal and Crude Oil

* Fording is currently the World's 2nd Largest seller of seaborne Metallurgical/Coking Coal...Australia's BHP Biliton (BHP) is the World's Largest seller of seaborne Metallurgical Coal

* After consummating the transaction, Teck will become North America's Largest Exporter of COKING Coal (aka Metallurgical Coal)

* Teck Cominco is currently the World's 2nd Largest Zinc producer...with this transaction, Teck will reduce its reliance on the commodity as Zinc prices have plunged 46% in the past year (prices for coal have more than doubled over that same time horizon)

* The deal will be transacted with a combination of cash ($9.8 Billion) and Teck Cominco stock...Fording Canadian shareholders will receive $82 in cash and 0.245 Teck share per each share of Fording they hold...Teck plans to issue 36.9 million new shares of stock to help finance the purchase

* The Fording sale to Teck comes ahead of changes to Canada's tax rules regarding income trusts, which are high-yield securities that pay out almost all of their cash flow each month to investors. Finance Minister James Flaherty said on Oct. 31, 2006, that Canada would tax income trusts for the first time starting in 2011 to limit government revenue losses and halt more companies from adopting the structure...Teck estimates the total tax savings following the deal at about $22 a share, he said.

* The bid for Fording tops Cleveland-Cliffs recent $10 billion takeover offer for Alpha Natural Resources, which was the biggest in the industry when it was announced just two weeks ago...FYI + for more info on the recent $10 Billion Cleveland Cliffs takeover, please search the Archive for my 6/17/08 post titled 'Steelmaking Coal Play Gets A Bid'.

Data Courtesy: Bloomberg