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

Peabody Energy Corp. (BTU) Monday lowered the value of its takeover proposal 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 viewed as likely a possible lowering of Peabody's bid following the government's tax announcement with Macarthur's shares having fallen 11.5% since the tax plan was introduced, from A$15.47 to A$13.69.

The Australian government's proposed tax has generated widespread criticism from resouces 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.

Macarthur recommended shareholders take no action on the A$15-a-share offer as it meets to review the proposal. Peabody initially offered A$13 a share for Macarthur before raising its offer to A$14 a share and A$16 a share.

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.

Peabody called the proposal a definitive" offer to take a controlling interest in the company. 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]