Peabody goes big on met with Anglo coal assets acquisition, says B. Riley

B. Riley analyst Lucas Pipes notes Peabody Energy (BTU) announced that it will acquire certain met coal assets of Anglo American (NGLOY) for an initial $2.3B, comprised of $1.7B cash and $625M deferred payments. There are also Grosvenor restart and price triggers for an additional consideration of up to $1B. The firm notes the transaction significantly re-weights the company’s portfolio to seaborne met coal, which management has previously described as the most attractive growth avenue. B. Riley believes the opportunity to acquire a met portfolio of this scale is rare, and thinks the transaction positions the company to generate more value through the cycle at a reasonable price. The firm has a Buy rating on Peabody Energy with a price target of $33.