Yanzhou Coal agrees to buy Gloucester in AUD2.1bn deal

China’s fourth-largest coal miner, Yanzhou Coal Mining Co, agreed to buy Australia’s Gloucester Coal for AUD2.1bn (US$2.1bn) in cash and shares. The acquisitionwill almost Yanzhou’s coal mines in Australia as well as expand its access to ports.

The proposed deal looked more expensive than recent industry transactions, said Nomura Holdings Inc in a report. “There is an overall premium to recent share prices and I think the market has captured a good proportion of that,” Lawrence Grech, a resources analyst at Austock Group Ltd. in Melbourne, said by phone. “There is an indication of value which Yanzhou is obviously signaling but the benefits of that are more than 18 months into the future.”

Rising demand for coal in China and India has pushed deals globally to a record US$35bn this year, compared with US$30.3bn last year, according to data compiled by Bloomberg. Yanzhou, which bought Felix Resources Ltd. for AUD3.1bn in 2009 in China’s biggest takeover of an Australian company, agreed in September to acquire two coal units of Wesfarmers Ltd for AUD296.8 million.