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Whitehaven Completes BHP Acquisition

Whitehaven Coal has successfully concluded its previously announced acquisition of the Daunia and Blackwater metallurgical coal mines, a strategic move that bolsters its position as a leading metallurgical coal producer. This transaction involves Whitehaven taking over 100% of the Daunia and Blackwater mines from the BHP Mitsubishi Alliance (BMA), a partnership between BHP and Mitsubishi Development.

The deal, worth a total of $4.1 billion, marks a significant expansion for Whitehaven and a shift in BHP’s operations, given their statement regarding the mines’ competitive potential within their global portfolio. BHP has noted that while the Daunia and Blackwater mines are high-quality assets with growth potential, they would face challenges competing for capital under BHP’s allocation framework, particularly considering BHP’s broader global capital deployment strategy.

To facilitate this acquisition, Whitehaven has already provided BMA with $2 billion in cash and a preliminary completion adjustment of $44.1 million for working capital, in addition to a $100 million deposit paid on October 18. The agreement also outlines a schedule for Whitehaven to pay the remaining balance of $1.1 billion over the next three years. Moreover, there is a contingent clause for a potential additional sum of up to $900 million tied to a price-linked earnout, which adds a performance-related dimension to the transaction.

Whitehaven’s CEO, Paul Flynn, emphasized the importance of this milestone in transforming the company into a leading name in the metallurgical coal market and delivering substantial benefits to all stakeholders. Flynn expressed gratitude to the teams at Whitehaven, BMA, BHP, and Mitsubishi, along with their advisors, for their efforts in ensuring the acquisition’s success. He stated the company’s eagerness to welcome the new teams and highlighted the focus on a smooth integration process and the continued importance of working with local communities and stakeholders.

The acquisition details were included in the market presentation released by Whitehaven on October 18, 2023. The company also announced its intention to provide the next update to the market on April 19, 2024, as part of its March quarter production report, where stakeholders anticipate more detailed insights into the impact of the acquisition on Whitehaven’s operational and financial performance.

Source: The Coal Trader, AI generated