By Brian Swint
Peabody Energy, a coal mining company, was falling early Monday after it agreed to buy the steelmaking coal business of mining giant Anglo American.
Shares fell 7.2% to $25.50 in premarket trading. The company is paying up to $3.8 billion in cash for the Anglo assets, which Peabody said will increase its metallurgical coal production to as much as 22 million tons in 2026 from an estimated 7.4 million tons in 2024, it said in a press release Monday. It confirmed the deal with an 8K form filed with the Securities and Exchange Commission.
It's normal for shares of an acquiring company to fall when a deal is announced as investors worry whether the upfront investment will pay off. If Peabody closes at its current low, it would be the biggest daily drop in a year and a half, according to Dow Jones Market Data.
For U.K.-based Anglo American, the world's largest producer of platinum, the sale is part of a broader streamlining of the business. It also plans to sell off its De Beers diamond arm as well as coal and nickel units after it fought off a takeover attempt from rival BHP. Anglo American's London-listed shares were rising 1.9% on Monday.
Write to Brian Swint at brian.swint@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 25, 2024 07:41 ET (12:41 GMT)
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