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.
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