Peabody Terminates Acquisition Agreement with Anglo American Amid Safety Concerns

Peabody has terminated its acquisition agreement with Anglo American due to a significant adverse change related to Anglo's steelmaking coal assets. The decision comes after an incident at the Moranbah North mine, which has not resumed longwall production. Peabody will now focus on safe and sustainable operations, returning 65-100% of free cash flow to shareholders, organic growth through its portfolio, and financial discipline. The acquisition's closing has been cancelled, and the sale of the Dawson mine to PT Bukit Makmur Mandiri Utama has also been terminated.

Peabody Energy has terminated its acquisition agreement with Anglo American due to a significant adverse change related to Anglo's steelmaking coal assets. The decision comes after an incident at the Moranbah North mine, which has not resumed longwall production [1]. Peabody management stated that the termination is due to the absence of a revised agreement that compensates for the impact of the incident on the most important mine in the transaction [1].

The acquisition, initially scheduled for April 2025, has been canceled. Additionally, the sale of the Dawson mine to PT Bukit Makmur Mandiri Utama has also been terminated [1]. Peabody has announced a four-pronged strategy to focus on safe and sustainable operations, returning 65% to 100% of free cash flow to shareholders, organic growth through its portfolio, and financial discipline [1].

Anglo American, which continues to make progress towards a "safe restart" of Moranbah North, has stated that the fire did not constitute a material adverse change (MAC) under the original agreement. The company has expressed disappointment with Peabody's decision not to complete the transaction and plans to initiate an arbitration process to seek damages for wrongful termination [2].

Anglo's share price was up 1.7% at 2,167p by 1447 BST following the announcement [2]. Peabody shares jumped as much as 3% in early deals on Wall Street but trimming gains to 0.8% by 0942 ET [2].

Looking ahead, Anglo American is confident that it will successfully conclude an alternative sales process for the assets following the inbound interest received in recent months [2].

References:
[1] https://www.marketscreener.com/quote/stock/ANGLO-AMERICAN-PLC-4007113/news/Peabody-signs-acquisition-agreement-with-Anglo-American-50874499/
[2] https://www.investments.halifax.co.uk/research-centre/news-centre/article/?id=20709756&type=bsm