Yancoal share price lifts as potential takeover slammed

A potential $5.07 per share takeover bid has been criticised by an independent board committee.

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Key points
  • The Yancoal share price is lifting this morning, reaching a high of $5.64 – representing a 3.8% gain
  • The gain comes on the back of news an independent board committee has found a potential takeover bid by Yancoal's parent company and major shareholder Yankuang Energy wouldn't be in the best interests of minority shareholders
  • Though, as Yankuang has a 62% holding in Yancoal, any potential bid might still have a chance of passing

The Yancoal Australia Ltd (ASX: YAL) share price is in the green after the company condemned a potential takeover bid.

Chinese state-owned entity Yankuang Energy Group – Yancoal's parent company and controlling shareholder – recently flagged its intention to put forward a bid for the ASX-listed company.

It's expected to offer $5.07 apiece for all Yancoal shares it doesn't already control.  

At the time of writing, the Yancoal share price is $5.56, 2.39% higher than its previous close.

Let's take a closer look at the latest on the potential takeover talks.

Group of smiling coal miners in a coal mine

Image source: Getty Images

Yancoal share price on the rise

The Yancoal share price is gaining this morning after an independent board committee deemed Yankuang's potential acquisition offer wouldn't be in the best interest of the company's minority shareholders.

Thus, the company won't be supporting a $5.07 per share bid or recommending it to shareholders.

However, Yankuang has a large holding in Yancoal – its stake makes up more than 62% of the company.

That means it might only need the support of a few other major shareholders to get a takeover bid across the line.

It's also worth noting Yancoal hasn't yet received an official takeover offer or proposal from its major shareholder.

The potential offer was previously expected to be made up of convertible bonds issued by Yankuang Energy. Yancoal noted, that if successful, the offer could see the company de-listed from the ASX and the Hong Kong Stock Exchange.

The independent board committee behind today's news was appointed by the ASX-listed coal producer. Its advisors included Gilbert + Tobin, advising on Australian legal matters; Freshfields Bruckhaus Deringer, advising on Hong Kong legal matters; and Deloitte Corporate Finance, advising on strategic and commercial matters.

News of a potential takeover bid comes amid a particularly good period for Yancoal and its share price.

Strong energy prices saw the coal company recording record revenue in 2021. On top of that, demand for the black rock has surged in 2022.

The Yancoal share price is currently 99% higher than it was at the start of this year. It has also gained 168% since this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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