M&A

Terracom bids $175M for Universal 

Yet another tilt in the wind for rival coal miner

Staff Reporter

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Terracom said it was offering Universal shareholders 33.5c per share consisting of 10c cash and about0.6026 new Terracom shares.
 
"This highly strategic transaction marks a transformational step for Terracom and Universal shareholders with the merged group providing investors with scale and exposure to a portfolio of successful operating and geographically diverse coal production assets," it said.
 
"The expanded production footprint and strong cash flow generation as a combined group is expected to provide an enhanced operating base to accelerate growth in the interests of all investors."
 
Terracom said the offer would allow both companies to continue to run successful coal operations with the improved benefit of geographic diversity and an expanded production footprint and also provide a substantial platform for future growth and development of the wider business.
 
Last year TerraCom acquired a 19.9% stake in the South Africa-focused coal miner from Coal Development Holdings for $35 million in cash and shares.
 
Universal plans to produce 6.6 million tons of coal this year from multiple mines.
 
TerraCom claimed institutional investors owning 27% of Universal were supportive of the transaction, which could create a combined entity with a market capitalisation of $294 million.
 
Universal had been subject to a number of failed takeover attempts in recent years.
 
The offer is scheduled to formally open during this month and should close by mid-March.

 

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