Yanzhou Coal to acquire Felix Resources for $2.9 billion

China's fourth-largest coal miner, Yanzhou Coal Mining Company (Yanzhou) has agreed to buy Australian coal producer Felix Resources (Felix) for around A$3.5 billion ($2.9 billion), consolidating Yanzhou's position in the Australian coal market.

Both the companies have entered into a Scheme Implementation Agreement (SIA) yesterday setting out the obligations of Felix and Yanzhou in respect of the proposed transaction.

Earlier this week, Felix requested the Australian Securities Exchange (ASX) to suspend its shares from trading, following takeover negotiations with Yanzhou. (See: China's Yanzhou Coal in talks to acquire Australia's Felix Resources for $2.8 billion) 

In a statement issued to the ASX yesterday, the Felix Board has recommended the deal subject to the conclusion of an independent expert that the transaction is in the best interest of its shareholders and there is no superior proposal from a third party.

Under the deal, Felix shareholders are offered a cash consideration of A$16.95 for each share they hold. In addition, they will also receive cash dividends totaling A$1.00 per share apart from another A$0.05 per share on account of the spin-off of Felix's subsidiary South Australian Coal Corp. (SACC).

A dividend of A$0.50 per share was declared yesterday, which will be paid by the end of October, and a special dividend of A$0.50 will be payable to Felix shareholders not later than three months after completion of the transaction.