BHP Billiton eyes US metallurgical coal producer Walter Energy: report

BHP Billiton, the world's biggest mining company, is weighing tabling a $55 per share cash bid for US metallurgical coal producer Walter Energy Inc, British tabloid Daily Mail yesterday reported, without citing sources.

The newspaper said that rumours of a takeover of the Alabama-based company has been hovering for more than a year, with BHP Billiton and commodities trader Glencore International named as potential suitors.

According to the tabloid, Walter Energy's stock had plunged by 58 per cent this year from a high of $100-plus level after demand for hard coking coal has fallen due to the global slowdown in the steel industry and also due to the availability of cheap and clean natural gas in the US.

Walter Energy is currently trading at a little below $30 a share, giving it a market value of nearly $2 billion.

It is highly unlikely that the Anglo Australian miner will pay a near 90 per cent premium, although Walter Energy is currently undervalued.

Walter Energy, formerly known as Walter Industries, is a "pure-play" metallurgical coal producer for the global steel industry with operations in the US, Canada and the UK with strategic access to high-growth markets in Asia, South America and Europe.