Anglo American signed a deal to sell its remaining steelmaking coal assets to U.S. coal miner Peabody Energy for up to $3.775 billion, in the mining giant's first major step in its large-scale business reshaping.
The global, diversified miner is under pressure to implement the restructuring plan it outlined in May to fend off a nearly $50 billion takeover bid from rival BHP. This will see the London-listed company become a solely copper, iron-ore and crop-nutrients producer, as it carves out its coal, diamond, nickel and platinum segments.
The sale of its remaining coal business to Missouri-based Peabody Energy is an important step toward delivering the strategy, Chief Executive Duncan Wanblad said Monday.
Anglo American said the deal takes the total sales value of its coal business to up to $4.9 billion, following the $1.1-billion sale of its stakes in two mines in Australia earlier this month.
The market had estimated the remaining coal business to be worth around $2.8 billion, according to RBC Capital Markets.
Shares rose 2% to 24.07 pounds in early morning trade in London, taking the year to date gain to 22%.
The deal comes less than a week before the end of a six-month standstill that would allow BHP to submit a new bid for Anglo. In May, the Australian mining giant had three bids rebuffed. This spurred Anglo to launch a restructuring to convince shareholders of its prospects and to ward off potential suitors.
"All the transactions to deliver our portfolio transformation are well in train," Wanblad said. The demerger of its platinum business, Anglo American Platinum, is still expected to happen toward the middle of next year. The unit is the world's largest producer of platinum-group metals and Anglo's biggest earnings driver just two years ago. However, demand for PGMs have slumped since.
Anglo added that it is seeing strong interest in its nickel business, with the sale process well progressed. The company expects a sale of its storied diamond unit, De Beers, to follow.
The agreement with Peabody comprises an upfront cash consideration of $2.05 billion, a deferred cash consideration of $725 million, as well as up to $550 million in a price-linked earnout and a contingent cash consideration of $450 million linked to the reopening of the Grosvenor mine in Queensland, Australia.
Operations have been suspended at Grosvenor since late June following a fire incident. Anglo said last month that there seemed to be limited damage in the underground area of the mine.
The deal marks Peabody's biggest acquisition since it emerged from bankruptcy protection in 2017. It had filed for Chapter 11 in April 2016 after a sharp decline in coal prices left it unable to pay its debt.
The upfront cash payment is expected to be finalized by the third quarter next year.
Write to Christian Moess Laursen at [email protected]