Tinkler's bid for Whitehaven on the rocks?

Coal prices fall, is a lower offer coming?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Whitehaven Coal Limited (ASX: WHC) received a takeover offer from mining magnate Nathan Tinkler's Tinkler Group back on the 13th July this year, valuing the company at $5.20 cash per share.

Whitehaven's shares are trading at $3.55, a massive discount to the offer price, and almost falling back to 52 week lows. Investors appear to be indicating that the takeover will not go ahead, and newspaper reports suggest they may be right.

Just yesterday, Blackwood Corp Ltd (ASX: BWD) advised that Mr Tinkler's private investment company, Mulsanne Resources, had been given an extension to find $28.4m for a stake in the company. Back in May, Mr Tinkler agreed to be become a majority shareholder in Blackwood with 33.85% of the company. It appears that he may be having trouble coming up with the funds, so investors, probably quite rightly, are questioning whether he's going to be able to raise $5.3 billion to take over Whitehaven.

According to the Sydney Morning Herald, a representative for Mr Tinkler denied any connection between the Blackwood and Whitehaven deals. The spokesperson went on to say that there had been a delay finishing the Blackwood deal documentation, which could take another few weeks.

Compounding his problems are the fact that coal prices have fallen to a two year low, and have fallen 20% since April 2012. With a 21% holding in Whitehaven, much of Mr Tinkler's wealth is tied up in the company, and with the falling share price, it may be difficult for him to raise the funds necessary to complete the takeover.

The Whitehaven takeover is the latest in a series of coal mergers and acquisitions with many coal miners leaving the ASX, with just a handful of independent miners left. (New Hope Corporation (ASX: NHC), which is currently the largest miner by market cap, is majority owned by Washington H Soul Pattinson (ASX: SOL), with a 60% shareholding.)

Apart from Whitehaven, most of the other listed coal companies on the ASX are explorers, rather than producers of coal.

Foolish takeaway

Nathan Tinkler may walk away from the Whitehaven deal, or even come back with a lower offer, given the rapid fall in coal prices. That's if he can find funding of course, which he may be struggling with.

If you're in the market for some high yielding ASX shares, look no further than our "Secure Your Future with 3 Rock-Solid Dividend Stocks" report. In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »