2nd UPDATE: Peabody Lowers Offer For Macarthur Coal To A$15/Share

Peabody Energy Corp. (BTU) Monday lowered the value of its bid for Macarthur Coal Ltd. (MCC.AU), citing the Australian government's announcement last week of a planned 40% resources super profits tax and following Peabody's due diligence of the Australian coal miner.

The U.S-based coal company is offering Macarthur shareholders A$15 cash for each share, down from a prior offer for A$16 a share, valuing Macarthur at A$3.8 billion.

Market participants had forecast Peabody could lower its bid following the government's tax announcement, which analysts estimated could reduce Macarthur's value by up to 18%.

The Australian government's proposed tax has generated widespread criticism from resources companies, some of which have said the tax could lead them to delay or abandon development of certain projects.

Peabody's revised offer is a swift turn of events from just a few weeks ago, when it lifted its bid for Macarthur twice to compete with New Hope Corp., which was also bidding for the coal producer.

Anglo-Swiss miner Xstrata PLC also approached Macarthur's major shareholders and appointed advisors for a potential bid, according to Macarthur, but an offer never emerged from Xstrata.

An industry source said neither New Hope nor Xstrata are actively pursuing Macarthur but Macarthur's board isn't likely to rush to consider the new offer.

Macarthur recommended shareholders take no action on the new proposal. The board has yet to set a meeting to review it, the industry source said.

The U.S. coal company remains willing to offer Macarthur's three major shareholders, Citic Resources Holdings (1205.HK), ArcelorMittal (MT) and Posco (005490.SE) the opportunity to retain their economic interest in Macarthur. The support of the key shareholders is uncertain. Citic (1205.HK), for one, hadn't thrown its support behind the prior, higher bid.

Macarthur's shares were down 1.9% to A$13.43 as of 0429 GMT, indicating that investors don't expect the proposal will be successful.

The scheme of arrangement put forward by Peabody requires approval from 75% of shares voted, which means support from Macarthur's major shareholders is needed.

A takeover, depending on how it is structured, could require just 50% approval. That could be executed with more ease considering Posco and ArcelorMittal, if they were on board, represent nearly 25% of shares outstanding.

Citic, Macarthur's biggest shareholder with a 22.4% stake, said it didn't have enough information to assess the prior A$16/share offer while Posco gave in-principle support for that bid and ArcelorMittal said it was worth considering.

The major shareholders either wouldn't comment or weren't immediately available Monday.

Peabody called the A$15/share proposal a "definitive" offer. Currently, the three major shareholders own about 47% of Macarthur.

"The definitive proposal delivers a clear, compelling and significant premium for Macarthur shareholders, and follows Peabody's due diligence as well as the introduction of the Australian resources profit tax proposal," Peabody said in a statement.

The U.S. energy company is encouraging Macarthur's board to move quickly on its offer.

-By Cynthia Koons; Dow Jones Newswires; 61-2-8272-4691; [e-mail]