Czech-based hard coal and coke producer New World Resources (NWR) on October 5 announced its offer to buy Polish coal producer Lubelski Wegiel Bogdanka SA for Zloty 3.43 billion ($1.2 billion) in order to increase reserves and enhance its market position.
The bid offered for Bogdanka, which was formerly owned by the state and privatized last year, is Zlotys 100.75 ($35.35) per share, a 13 percent premium over Bogdanka's closing price on October 4.
Commenting on the proposed acquisition, Mike Salamon, executive chairman of NWR, said, "Combining NWR and Bogdanka will create a leader in the Central European coal industry with Poland at the heart of its future development. The combined group will have the scale and resources to be a powerful platform for further regional consolidation, benefitting from an enhanced reserve base, product and geographical diversification and complementary customer bases."
NWR expects to finance approximately €300-400 million from its own cash resources. It has also entered into loan facility agreement with an affiliate of BXR Mining B.V. (NWR's majority shareholder), Citigroup Inc. and JP Morgan Chase & Co.
The offer only becomes effective if accepted by at least 75 percent of Bogdanka's shareholders. Salamon said that 30 percent of the shareholders of the two companies overlap.