Whitehaven rebukes activist investor pushing back on $5b mine buy
Whitehaven Coal says its interest in buying coking coal mines “should come as no surprise to any of our investors” in a rebuke to the activist hedge fund pushing for it not to proceed with a multi-billion dollar acquisition.
In its first public response to Bell Rock Capital Management, which controls just under 5 per cent of the miner, Whitehaven said greater exposure to coking coal has been “a core pillar of our strategy for many years”.
“Whitehaven would not contemplate an acquisition that is not value accretive for shareholders,” it told The Australian Financial Review.
The Daunia coal mine in Queensland is one of two put up for sale by BHP and its partner, Japan’s Mitsubishi.
Whitehaven is a short-listed party in the sales process for the Daunia and Blackwater metallurgical coal mines in Queensland which are being sold by BHP and its partner, Japan’s Mitsubishi Development Corporation.
The mines are expected to sell for more than $US3.5 billion ($5.4 billion).
But London-headquartered Bell Rock is campaigning for Whitehaven to pull out of the auction, concerned that it would lead to the “destruction” of value.
In a letter to Whitehaven’s board on Wednesday, Bell Rock’s chief investment officer, Michael O’Mara, said the mines were “very high-risk investments” located “in an unattractive jurisdiction with the highest coal taxing regime in the world”.
“Additionally, mining transactions are notoriously difficult and the operating environment in Australia is challenging, particularly in the coal industry,” Mr O’Mara wrote, adding that the company should be forced to put the transaction, if successful at the auction, to a shareholder vote.
In the letter, Mr O’Mara said the acquisition would represent some 90 per cent of
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