Macarthur is offering Gloucester shareholders a choice of either 0.84 Macarthur shares for every one Gloucester share or $8 cash for every one Gloucester share.

After receiving an independent expert’s report from Deloitte Corporate Finance, which concluded that the Macarthur offer was fair and reasonable, Gloucester today lodged its target statement with the Australian Securities & Investments Commission.

Deloitte estimated the fair market value of a share in Gloucester is $7.75 to $8.75 on a control basis, and the valuation range for a share in the merged entity is between $8.90 and $10.80, based on a sum of the parts method.

Based on the share market trading activity in Macarthur since the announcement of the offer, the assessed value of a share in the merged entity is in the range of $10.00 to $11.00.

With regard to the value of a share in the merged entity derived using a sum of the parts
valuation and the recent share market trading activity in shares in Macarthur, the independent
expert has estimated the value of a share in the merged entity as being between $9.50 and $11.00

The scrip alternative has been valued between $8.00 and $9.25 per Gloucester share.

Gloucester directors also wanted Deloitte to determine whether Noble Group, which is a major shareholder of Gloucester, or any of its associates, would receive a collateral benefit as a result of Macarthur’s acquisition of Middlemount, which is owned 25.34% by Noble.

Located 6 kilometres southwest of the township of Middlemount in central Queensland, Middlemount is expected to produce low volatile PCI coal and semi-hard coking coal.

Macarthur entered a definitive legal documentation with Noble in which future royalties payable by Middlemount to Noble have been reduced by 0.5% to 1%.

Macarthur has also agreed to grant Noble the option of applying the amounts owed for the royalty reduction, the cancellation of Noble’s 20% option over Middlemount and certain loans owed by Middlemount to Noble towards the subscription for Macarthur shares at $9.70 each.

“Based on a qualitative and quantitative analysis of the Middlemount transaction and having regard to the limitations set out in the independent expert’s report, nothing has come to the attention of the independent expert to cause the independent expert to believe that the Middlemount transaction would constitute a receipt by Noble of a collateral benefit,” the company said.

Gloucester’s shares were down by 1c to $9.32 in morning trade while Macarthur’s shares were down 8c to $11.22.