London/New Delhi: Paving the way for Peabody Energy to have a complete control on Australia's Macarthur Coal, ArcelorMittal today said it will exit from the joint venture which was used to acquire the Australian firm.
The move has come just a day after both the companies jointly announcing that their joint venture PEAMCOal has acquired controlling stake in Macarthur and now holds approximately 59.85 percent stake.
In PEAMCoal, the Lakshmi Mittal-led company has 40 percent stake and it was incorporated in July this year for acquiring Macarthur Coal.
In a statement, ArcelorMittal said that it has served the termination notice to Peabody for exiting from the JV and will remain a shareholder until the termination arrangements are completed.
The arrangements are expected to be completed in three months time, the company said.
"In taking this decision, ArcelorMittal has determined that it would no longer be appropriate to allocate substantial capital to the acquisition of a non-controlling, minority business interest.
"This is in accordance with the rights that ArcelorMittal originally negotiated with Peabody at the time the cooperation and contribution agreement was concluded," it added.
The statement further said that the capital required to retain its interest in Macarthur Coal and future growth is more than "what is appropriate to allocate to a business that ArcelorMittal does not fully control and consolidate".
Yesterday, in a joint statement, both the firms had announced that their joint venture PEAMCoal has acquired controlling stake in Macarthur Coal with a stake of approximately 59.85 percent shares in the Australian firm.
PEAMCoal, the 60:40 joint venture of Peabody and ArcelorMittal, had offered AUD 16 per share for acquiring Macarthur's shares, valuing the firm at AUD 4.8 billion.
The company has also secured all regulatory clearances for the acquisition.
Macarthur, the world's largest producer of pulverised coal, with its two mines in Queensland's Bowen Basin, has been a takeover target for many companies and had fended off four such bids in recent times, including of Peabody Energy.
The company holds total coal reserves of 270 million tonnes and total resources of approximately 2.3 billion tonnes. It exports its entire production and has plans to double its production capacity by 2014.
First Published: Tuesday, October 25, 2011, 22:05