Yanzhou coal merger plows ahead

Yanzhou Coal Mining Company (YZC.NYSE) and Australia’s Gloucester Coal (GCL.ASX) will move ahead with a merger to create the largest independently listed coal producer in Australia, The Wall Street Journal reported. The firms have agreed that the merged unit, which will combine Yanzhou’s Yancoal Australia with Gloucester, will be 78%-owned by Yanzhou, one percentage point more than the initial merger plan proposed in December. The deal will bring Gloucester cash flow, increased investment in coal projects and exposure to assets including Yancoal’s Moolarben open-cut mine, one of the largest and lowest-cost themal-coal mines in New South Wales state. Gloucester’s shareholders stand to receive US$682 million and a 22% stake in the new company. Gloucester’s majority shareholder, Noble Group (NE.NYSE), has approved the deal and is expected to receive a 13.2% stake in Yancoal and A$412 million in cash. The merger is subject to regulatory approval and is expected to be finalized in the second quarter.