China's Yanzhou closes US$710 million deal for Gloucester Coal

China’s Yanzhou Coal Mining (1171.HKG) announced plans to merge its Australian operations with Australia’s Gloucester Coal (GCL.AX), Reuters reported. The deal would be worth US$710 million, and create one of Australia’s largest listed coal companies. The coal sector in Australia has seen a spade of consolidation from Asian companies looking to satisfy domestic demand. As part of the deal, Yanzhou will own 77% of the merged company, and Gloucester shareholders the remaining 23%, along with a payment of US$3.02 per share. This reverse merger will give Yanzhou Australia a local listing, without the need for an initial public offering. Yanzhou acquired another Australian coal miner, Felix Resources, for US$3.34 billion in 2009. A condition of that deal was to float 30% of the business on the local exchange by 2012. Yanzhou Coal chairman Li Weimin said in a statement that the merger plan with Gloucester will allow it to meet that requirement.