Yanzhou Coal to Acquire Felix for About A$3.5 Billion

Yanzhou Coal Mining Co., China¡¯s fourth-biggest producer of the fuel, agreed to buy Australia¡¯s Felix Resources Ltd. for about A$3.5 billion ($2.9 billion) to secure supplies.

Yanzhou will pay A$18 a share for Felix, including a dividend and stock in a unit, according to a statement from the Brisbane-based company. That represents a premium of 6.5 percent to the last traded price of Felix shares, which have surged 92 percent this year in anticipation of the deal.

The acquisition is China¡¯s biggest in Australia since Rio Tinto Group rebuffed a $19.5 billion investment from state-owned Aluminum Corp. of China in June. Undeterred by that failure or the strained relations caused by the arrest of four Rio executives in Shanghai, China is buying resources abroad as its 4 trillion-yuan ($585 billion) economic stimulus spurs demand.

¡°Yanzhou Coal has been looking at expanding its assets into Australia for several years,¡± said Andrew Driscoll, an analyst at CLSA Ltd. in Hong Kong. ¡°Its production levels in China are fairly flat in comparison with its peers and opportunities for expansion at home are limited. It needs to look abroad to expand output.¡±

The transaction will need to be approved by Australian and Chinese regulators as well as shareholders of both companies, Felix said in the statement.

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