Dow Jones Newswires: Peabody, Australia’s Coronado end talks over potential merger

by | Nov 6, 2022 | Stock Market

SYDNEY — Coronado Global Resources Inc. and Peabody Energy Corp. mutually agreed to end talks over combining to create a new global coal giant. Australia-listed Coronado
CRN,
-5.73%,
which also has operations in the U.S., and Peabody
BTU,
+13.21%
on Monday both said they had ended discussions over a combination that would have created a company worth about $6 billion.

Neither company gave a reason for the failure of the talks. Coronado announced the development in a filing to the Australian Securities Exchange. Peabody, the largest U.S. coal producer, confirmed in an emailed statement. Neither Peabody nor Coronado had disclosed terms of any potential merger. The mooted tie-up had been seen as an indicator of how the coal-price surge that followed Russia’s invasion of Ukraine is transforming the sector’s fortunes. However, Newcastle coal futures, the main Asian benchmark, have declined about 15% since Coronado’s Oct. 12 filing to the Australian Securities Exchange confirming merger talks. At around $350 a metric ton, Newcastle coal futures are still more than double their level at the beginning of the year, according to FactSet. Peabody last week reported third-quarter net income of $375.1 million for the three months through September, compared with a $44.2 million loss a year earlier. “Coal prices remain at levels that result in a favorable outlook for each of our operating segments,” Peabody President and Chief Executive Officer Jim Grech said on Nov. 3. As recently as two years ago, Peabody was warning that it might enter bankruptcy protection for a second time, given weakness in coal markets after the Covid-19 pandemic led to a sharp drop in power demand as factories closed or reduced output. Thermal coal is used to generate electricity, but is considered among the dirtiest fossil fuels because it produces higher quantities of carbon d …

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