AMAX: Wants to Buy Peabody Holding, Bids $1.25 Billion

Amax Inc., the nation’s third-largest coal producer, made a $1.25-billion offer Friday for industry leader Peabody Holding Co., raising the possibility of a bidding war with a major Peabody investor.

The bid was rejected immediately by Hanson Industries, which owns 45% of Peabody and is attempting to buy the rest. Hanson responded by raising its offer for the Peabody shares it doesn’t own.

The remaining 55% of St. Louis-based Peabody is owned by Newmont Mining Corp. of Denver. Hanson, in turn, owns 49% of Newmont.

Hanson in March offered to buy Newmont’s stake in Peabody for $715 million. But under terms of the sale agreement between Hanson and Newmont, the companies agreed to consider outside bids for all of Peabody until the deal with Hanson closed.

Closing tentatively was scheduled for sometime next month, said Newmont spokesman James Hill.

After New York-based Amax disclosed its bid Friday, Hanson immediately increased its offer for Newmont’s Peabody stake to $725.6 million. That tops the $718.5 million that Newmont’s stake is worth under the Amax offer, Hanson said.

Hill said Newmont’s agreement to sell its Peabody stake to Hanson remained in effect but that the Amax bid started an auction process for Peabody.