core sector communique

Peabody energy and ArcelorMittal submit all cash offer to acquire Macarthur coal

• All cash takeover offer for Macarthur Coal by Peabody Energy and ArcelorMittal
• Total value of A$15.66 cash per share represents 45% premium to one month volume weighted average price
• Provides Macarthur Coal shareholders with attractive premium, liquidity and certainty of value

St. Louis, Luxembourg, August 1 - Peabody Energy (NYSE: BTU) and ArcelorMittal (NYSE: MT) today confirm that following the recent completion of due diligence they intend to launch an all-cash off-market takeover bid to acquire all the shares in Macarthur Coal Ltd (ASX: MCC).
Under the offer, Macarthur shareholders will be offered A$15.50 cash per share, valuing the equity in Macarthur at approximately A$4.7 billion.


Macarthur shareholders will also be entitled to retain any final dividend declared by Macarthur in respect of the financial year ended June 30, 2011, up to an amount of 16 cents per share, without reducing the offer price. This represents a total value of A$15.66 cash per share.


Following due diligence, Peabody and ArcelorMittal attempted to negotiate a bid implementation agreement (BIA) with Macarthur. However, Macarthur was not willing to engage on a BIA on customary terms even with Peabody and ArcelorMittal's willingness to improve the price from the original proposal if such a BIA could be agreed. As a result, a formal offer was submitted to Macarthur, valuing the company at $15.66 per share (inclusive of the dividend) without a BIA while seeking a recommendation. The Macarthur board declined to recommend this offer.

"Peabody and ArcelorMittal believe our bid is compelling," said Peabody Energy Chairman and Chief Executive Officer Gregory H. Boyce, "And we have decided to take this attractive offer directly to Macarthur shareholders to provide them with significant value."


Aditya Mittal, CFO and Member of the Group Management Board at ArcelorMittal said, "We are making an attractive offer directly to shareholders, which represents a 41% premium to the closing price immediately before our approach was disclosed to the market."


The total value to be received by Macarthur shareholders of up to A$15.66 per share represents a substantial premium of:

• 41% to A$11.08 per share, the closing price on July 11, the day Peabody and ArcelorMittal's approach was disclosed to the market;
• 44% to A$10.85 per share, the 15-day VWAP to July 11;
• 45% to A$10.82 per share, the one-month VWAP to July 11;
• 38% to A$11.32 per share, the three-month VWAP to July 11; and
• 36% to A$11.50 per share, the price at which Macarthur raised equity in August 2010.

Peabody and ArcelorMittal urge Macarthur shareholders to accept the offer to receive a substantial premium for their investment.

• This is an offer that is superior to Macarthur's relevant trading ranges, not only in its recent trading history, but over an extended time frame.
• The bid fully recognises Macarthur's existing operations and growth prospects.
• The deal protection measures to which Macarthur refers are, in fact, quite customary.

Should the offer be successful, Macarthur will form an integral part of Peabody Australia and expand ArcelorMittal's mining interests in the key resource market of Australia. Both Peabody and ArcelorMittal acknowledge and value the contribution that Macarthur employees will make to the ongoing operations and growth plans.


The offer is made by a newly formed company, PEAMCoal Pty Ltd (ACN 152 004 772), to be owned 60% by Peabody and 40% by ArcelorMittal. PEAMCoal has a relevant interest of 16.1% in Macarthur's shares. Committed financing for the transaction has been secured.

The offer is subject to a limited number of conditions including minimum 50.01% acceptances, approval by Australia's Foreign Investment Review Board, other regulatory approvals and other standard conditions.
Peabody and ArcelorMittal expect to lodge the Bidder's Statement in relation to the offer with the Australian Securities and Investments Commission ("ASIC") shortly. The Bidder's Statement will set out in detail why Macarthur shareholders should accept the offer and will be dispatched to Macarthur shareholders approximately two weeks after its lodgement with ASIC.
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UBS is serving as lead financial adviser to Peabody. Bank of America Merrill Lynch and Morgan Stanley are also providing financial advisory services, and Freehills is serving as legal adviser. ArcelorMittal has engaged RBC Capital Markets as its financial adviser and Mallesons Stephen Jaques as its legal adviser for the proposed transaction.