THE UK’s largest coal supplier was yesterday reported to be the subject of bid interest from a Vienna-based investment fund.
Meinl International Power last week notified UK Coal’s chief executive Jon Lloyd that it wanted to acquire the company’s coal operation, which is based around four deep mines and seven surface mines, and its power generation business, which uses waste gas from mines to produce electricity.
The Sunday Times said Meinl’s approach contained no bid price, but the newspaper said analysts estimated the mining operation to be worth between £300m million and £400m.
Meinl, which was founded in June 2006 with the aim of buying energy assets across Europe, has requested a meeting with the UK Coal board, as well as access to sensitive financial data so it can formulate its offer.
However. the UK Coal board is likely to reject the approach, particularly given improved prospects for the coal business.
As well as rising coal prices, the company has renegotiated a number of long-term coal contracts, including new deals with E.ON and EDF Energy. Shares have also risen as UK Coal investors focus on the value of the company’s property estate, which could boast as many as 70 development sites.
The Sunday Times said this emphasis on property may have fuelled Meinl’s belief that UK Coal could be persuaded to sell the mining arm.
Doncaster-based UK Coal has revived its mining fortunes after closing a number of under-performing pits and overhauling working practices. It is now left with deep mines at Welbeck and Thoresby in Nottinghamshire, Daw Mill – Europe’s biggest single site colliery – in the West Midlands and Kellingley, North Yorkshire.
It also has seven opencast mines in England, including two in Northumberland and one near Consett. The company accounts for almost half of all coal mined in Britain.
It is not the first time UK Coal – previously RJB Mining – has attracted interest. In 2000, it held talks with American conglomerate Renco, while in 2005 there was a takeover approach from a consortium that included private equity firm Alchemy.