A private equity group spearheaded by Apollo Global Management is expected to complete a purchase of Anglo American’s coal assets in a deal thought to be worth over a billion dollars.
Several sources with direct knowledge of the deal that prefer to remain anonymous said the two companies had “an exclusivity period of around a fortnight in which to put in a firm offer”. They added that they believe “Apollo will enter the highest bid and should come out with the agreement”.
The sources also said that it could be many weeks until any agreement is officially completed and announced.
The Australian head office of Anglo American was not directly available for comment on the news and Apollo also could not be approached.
Some news outlets had previously reported that Glencore and other big players in the mining game were taking a close look at purchasing the assets. There are also reports abroad that companies from India, Japan and China are interested.
“We received word from our sources close to the Chinese government that their biggest state run mining firms might put in a combined offer for Anglo American assets,” said Zheng Longwei, Chief Executive Officer at CTI China Renaissance in an email to clients. “All eyes are on the meeting with Apollo as further bids cannot be tendered until after the exclusivity period.”
Following extensive consolidation in the mining industry due to a prolonged dip in the commodities market, Anglo have been forced to sell assets after being left in significant debt. The firms CEO, Mark Cutifani, said that after the coal sale the company will focus on three main commodities, diamonds, platinum and copper.
Anglo shareholders have been holding out on the sale this year as coal prices and other commodities have seen a moderate rally, which has made miners less keen to sell their goods.
The sources close to Anglo reiterated that the company was still fully committed to selling the coal assets, however, with Bank of America Merrill Lynch currently running the sale of two Queensland coal mines. The total value of assets sold this year could be more than $3.5 billion.
Any sale will have to go through a regulatory commission to ensure anti-competition laws are not violated. The sources said that the laws would favour the Apollo consortium rather than large mining companies such as BHP and Glencore.
Apollo has one more week left on their exclusivity meeting until a decision needs to be made.
