B. Riley analyst Lucas Pipes notes Peabody Energy (BTU) announced that it will acquire certain met coal assets of Anglo American (NGLOY) for an initial $2.3B, comprised of $1.7B cash and $625M deferred payments. There are also Grosvenor restart and price triggers for an additional consideration of up to $1B. The firm notes the transaction significantly re-weights the company’s portfolio to seaborne met coal, which management has previously described as the most attractive growth avenue. B. Riley believes the opportunity to acquire a met portfolio of this scale is rare, and thinks the transaction positions the company to generate more value through the cycle at a reasonable price. The firm has a Buy rating on Peabody Energy with a price target of $33.
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