Squire Patton Boggs is acting for ASX, AIM and JSE listed Coal of Africa Limited (“CoAL”) on its AU$126.4 million (£60 million) recommended takeover offer for ASX listed Universal Coal plc (“Universal”), made through a combined scrip and cash consideration, with a loan note alternative. The takeover will also constitute a reverse takeover for CoAL under the AIM rules.
The two companies both operate in South Africa and have complementary business, development and funding profiles. The transaction, which is expected to complete in March 2016 subject to receiving necessary approvals, will create a leading listed coal mining company with a diverse portfolio of coal assets and an enhanced financial and market profile.
The transaction is novel as Universal is an English company whose place of central management and control is outside the UK, therefore the takeover offer is not regulated by either the UK or Australian takeover regimes, although elements of both have impacted the structure and implementation of the transaction. As the offer includes a share consideration element, the offer document will also comprise an Australian prospectus, with relief being sought from the Australian Securities and Investments Commission to facilitate the offer. UK shareholders of Universal are excluded from the share consideration component and instead may only receive cash, or the loan note alternative.
David Brown, CEO of CoAL, commented: “The combination of Universal’s producing assets and CoAL’s development portfolio, coupled with the excellent shareholder support ensures that the merger, as a first of its kind in the South African coal industry, will not be the last – we see the enlarged group as a springboard to creating a new coal mining force. The cross-border expertise of global firm Squire Patton Boggs has been invaluable in supporting us all through this important strategic process.”
The Squire Patton Boggs team advising CoAL is being led in the UK by Corporate partner Adam Hastings, with associates Hannah Graham and Victoria Kierans, and in Australia by Corporate partner Simon Rear based in Perth, supported by senior associate Chris Rosario and associate Ben Stewart.
“This is a complex transaction,” explained Adam Hastings, “one that has required knowledge of multiple markets and regulatory frameworks, and a creative approach given the lack of a directly applicable takeover regime. It is particularly satisfying that we have been able to utilise our UK and Australian capital markets and natural resources practices to advise a much valued and long-standing client on such a significant and important transaction. I am delighted that the two teams have worked together so seamlessly, despite the distance and time difference.”
“It has been excellent working with Coal of Africa on what has been a very complicated cross-border takeover, involving a hostile third party competitive bidder who also owns 30% of Universal,” added Simon Rear. “We look forward to progressing the transaction and the offer becoming unconditional, with Coal of Africa being successful in their takeover and development of Universal Coal.”
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