Peabody Just Torched a $3.8B Deal--Anglo's Coal Exit Dreams Go Up in Flames

What was supposed to be a quick win for Anglo American just turned into another costly detour. Peabody Energy BTU has pulled out of its $3.8 billion deal to acquire Anglo's steelmaking coal assetsciting the March fire at Moranbah North as a deal-breaking material adverse change. Anglo disagrees. It's preparing for arbitration, calling the exit wrongful and now eyeing damages. Peabody, meanwhile, wants its $75 million deposit back and is shelving plans to flip one of the mines to an Indonesian buyer. Both sides dug in. Neither blinking.

For Anglo, the timing couldn't be worse. The company struck this deal last November to fast-track its pivot away from coal and toward copper and iron ore, all while fending off a $49 billion takeover attempt by BHP. This coal sale was meant to be the easy parta clean exit from a legacy business with ready demand. Instead, Anglo's now back at square one, trying to find a new buyer in a market where met coal prices have slipped. CEO Duncan Wanblad insists there's interest, but any new deal will likely come with a longer timeline and a thinner margin.

Now comes the legal slugfest. Both companies are holding firm on their interpretation of the Moranbah mine fire, and analysts at Jefferies say a drawn-out arbitration is looking increasingly likely. Complicating matters further: GrosvenorAnglo's largest met coal asset and also part of the Peabody dealremains shut after its own fire last year. Until the dust settles, Anglo's coal exit plan stays in limbo. Investors hoping for clarity may have to wait.