Peabody Energy to acquire Anglo American steelmaking coal assets for $2.32B

Peabody announced it has agreed to acquire steelmaking coal assets from Anglo American. The transaction is expected to close mid-2025, subject to customary closing conditions. In consideration for the transaction: Peabody has agreed to pay cash of $2.32B, comprised of cash of $1.7B at closing and deferred payments of $625M payable in four annual installments commencing on the first anniversary of the completion date. Peabody has also agreed to further contingent payments of up to $1B, subject to potential favorable future events. Proceeds to Anglo American would also include $455M made possible by the acquisition of Dawson Mine by PT Bukit Makmur Mandiri Utama in a back-to-back transaction. The acquisition includes four metallurgical coal mines – Moranbah North, Grosvenor, Aquila, and Capcoal – located in Australia’s Bowen Basin. Approximately 80% of the mines’ output is hard coking coal. The mines are complementary to Peabody’s existing Australian platform, including Centurion Mine, and are expected to produce approximately 11.3M tons of primarily hard coking coal in 2026. The acquired mines have an average mine life greater than 20 years with 306M tons of marketable reserves and an additional 1.7B tons of coal resources The acquisition is expected to transform Peabody’s metallurgical coal segment, increasing metallurgical coal production from an estimated 7.4M tons in 2024 to an expected 21M-22M tons in 2026. Peabody’s acquisition is contingent on regulatory approvals, clearance of pre-emption rights by minority partners of the assets, and other customary closing conditions. The company has secured a bridge facility commitment to finance the acquisition. The company intends to obtain permanent financing in lieu of borrowing under the bridge facility and targets a debt-to-EBITDA ratio ceiling of approximately 1.5x. The transaction agreement provides for an upfront cash payment of $1.7B n, as well as $625M of deferred cash consideration to be paid over a four-year period, $450M of contingent consideration based on the successful restart of Grosvenor, and up to $550M of contingent consideration based on a revenue sharing agreement over a five-year period6. All referenced transaction components exclude the Dawson Mine, which Indonesia’s PT Bukit Makmur Mandiri Utama has agreed to acquire for total consideration of $455M, subject to pre-emption rights and other customary closing conditions.