An independent board committee (IBC) of Yancoal Australia has rejected the $1.8bn takeover offer from major shareholder Yankuang Energy Group Company.
Based in China, Yankuang currently owns a 62.26% stake in Yancoal, in which Anglo-Swiss commodity trading and mining company Glencore has a 6.4% interest.
Last month, Yankuang said it was looking to offer $3.60 per share for Yancoal shareholders in convertible bonds for the remaining 498.2 million shares it does not own.
However, the decision to reject the offer follows an evaluation of the potential transaction by Yancoal’s IBC.
The committee unanimously concluded that Yankuang’s current proposed terms would not be in the best interests of minority shareholders of Yancoal, in terms of both the value and the form of the proposed consideration.
Yankuang added that it ‘looks forward to continuing its discussions’ with Yancoal’s IBC.
In a press statement, Yancoal said: “Accordingly, the IBC has informed Yankuang Energy that it cannot support or recommend the potential transaction in its current form.”
Following the rejection, Yankuang Energy said it was open to negotiations to acquire the remaining shares in its majority-owned unit Yancoal Australia.
Recently, Reuters reported that the offer by the Chinese firm was ‘unacceptable’ to Glencore as it ‘significantly undervalues’ the stock.
Yancoal said it had not received Yankuang’s acceptable formal offer.
If the deal materialises, Yankuang’s stake could be near the 90% mark in Yancoal Australia.
According to Australian rules, Yankuang would subsequently be allowed to acquire all the smaller shares in Yancoal held by institutional and retail investors and make it private.