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Thailand's Banpu bids for Australia's Centennial Coal

SYDNEY (AFP) -- Thailand's Banpu launched a 2.1 billion US dollar takeover bid for Australia's Centennial Coal on Monday, signalling renewed interest in the sector just days after a mining tax row was settled.

The friendly 2.5 billion Australian dollar takeover, which values Centennial at 6.20 Australian dollars and has been recommended by its board, sent shares in both companies soaring.

"Banpu's offer recognises both the current profitability of Centennial and its upside," Centennial Chief Executive Bob Cameron said in a statement.

The deal represents a 40 percent premium on Centennial's closing share price on Friday. The Thai energy firm already holds a 19.9 percent stake in the miner.

Banpu's offer is the first takeover bid in Australia's mining sector since the government announced a 40 percent resources tax in early May, which threw the industry into uncertainty and prompted some firms to put projects on hold.

The dispute drained vital support from ex-prime minister Kevin Rudd, who was deposed by Julia Gillard in a party mutiny last month. Gillard announced a compromise deal with the miners on Friday.

Banpu said in a statement it was "excited to have exposure to the Australian coal sector and believes that an acquisition of Centennial would be the initial step in driving further consolidation of the sector".

It added that it was "strongly supportive of the Centennial management team and its current strategy, and would expect Centennial's existing management team to continue with operations and development projects as planned".

Banpu shares were up 2.3 percent at 616 baht in early afternoon trading on the Thai stock exchange, while Centennial shares surged 31.90 percent higher in Sydney.

"It certainly looks like PM Gillard’s new (tax) has turned the takeover tap back on," said IG Markets strategist Ben Potter. "This looks to be a significant windfall for Centennial shareholders and will likely reignite mergers and acquisitions speculation across the sector."

The resources sector provides Australia's two biggest exports, iron ore and coal, which are in huge demand by Asian economies and helped the country avoid recession during the financial crisis.

The deal needs approval from Australia's foreign investment watchdog, which will probably want reassurances about maintaining coal supplies to domestic power stations.

-- Dow Jones Newswires contributed to this report --

-- (c) Copyright AFP 2010-07-05