Shares in Macarthur Coal surged 37 per cent following the $4.7 billion offer from US coal giant Peabody Energy, sparking speculation that Xstrata is positioning itself to make a contending bid.

 

Peabody’s after hours $15.50 a share cash bid fuelled the price rally as markets opened. If completed, the bid would position Peabody, and co-bidder ArcelorMittal, as majority stake owners at 50.01 per cent pending approval from the Foreign Investment Review Board.

 

Macarthur Coal, who is currently the world’s largest producer of seaborne coal injection, will seek to engage in discussions with Peabody on price and terms.

 

Macquarie analyst Mitch Ryan told The Australian that Macarthur is ripe for a takeover bid following a number of attempts in 2010.

 

"The chances of deal completion appear higher this time," he said. "If there is a dark horse, it would be Xstrata," Mr Ryan said.

 

The news of the potential take over has drawn heavy criticism from the Coal, Forestry, Mining and Energy Union (CFMEU) who have accused the industry of double standards in it’s “scare campaign” over the carbon tax.

 

"The coal industry tells one story to the public with their scare campaign and another story to the markets," CFMEU president Tony Maher said.

 

"We know what's happening and the workers know what's happening. They listen to these scare campaigns and they see their mine is doubling in capacity, the ports are doubling in capacity. So it's all a nonsense."