UPDATE 3-Thai Banpu buys into Australia’s Centennial Coal

* Banpu buys 14.9 percent stake

* Banpu to seek government approval to lift stake – source

* Centennial shares jump 18 pct, Banpu down 4.1 pct

* Banpu in touch with Centennial
(Adds Centennial comment, analyst comment, valuation)

By Sonali Paul and Khettiya Jittapong

MELBOURNE/BANGKOK, May 6 (BestGrowthStock) – Thailand’s top coal
miner, Banpu PCL (BANP.BK: ), has bought a 14.9 percent stake in
miner Centennial Coal (CEY.AX: ), marking the latest in a flurry
of foreign moves on Australian miners.

Shares in Centennial, Australia’s largest independent coal
producer, shot up as much as 25 percent to a 19-month high of
A$5 on Thursday after Banpu picked up part of the stake at that
price, valuing the group at A$2 billion ($1.82 billion).

Banpu plans to apply for approval from Australia’s Foreign
Investment Review Board to raise its stake to 19.9 percent, the
threshold before it would have to make a full takeover offer, a
source involved in the deal said.

The Thai group likes Centennial’s management, has no
hostile intentions, and plans to be a long-term investor, the
source said, declining to be identified ahead of an
announcement from Centennial.

Banpu has contacted Centennial, Centennial’s spokeswoman
Katie Brassil said, but she declined to comment any further on
the talks.

Banpu’s move on Centennial follows U.S. miner Peabody
Energy’s (BTU.N: ) $3.7 billion bid for Macarthur Coal (MCC.AX: )
and Chinese company Yanzhou Coal Mining Co’s (1171.HK: ) $2.9
billion takeover of Felix Resources last year.

Foreigners are eyeing Australian mines to tap into soaring
exports of metals and coal to Asia, particularly China and
India.

There had been some fear that a hefty new tax on resources
profits proposed by the Australian government last weekend
would chill takeover activity, but Banpu was undeterred, the
source said.

Uncertainty over the final shape of the tax would make it
unlikely anyone else might try to pounce on Centennial in the
near term, Wilson HTM analyst Andrew Pedler said.

“I don’t think Centennial’s in play — not because it’s a
bad company, it’s because of the political climate,” he said.

At A$5 a share, Banpu paid 13.4 times forecast earnings for
2011 for at least part of its stake, in line with the multiple
Peabody is offering in its A$16 a share bid for Macarthur Coal.

“I thought that was a fair price,” Pedler said.

Centennial is Banpu’s first investment in Australia, one of
its targets for offshore expansion alongside Indonesia and
South Africa, as its Thai mines ran out of coal a few years
ago. It considered buying PT Berau Coal in Indonesia last year,
a business later acquired by an Indonesian investment firm.

Valued at $5.7 billion, Banpu is Indonesia’s fourth-largest
coal miner with five mines and has three mines in China.

It has coal reserves of about 300 million tonnes in
Indonesia with a reserve life of about 13 years, and Chief
Executive Chanin Vongkusolkit has said it is looking to expand
that to 15 years.

Centennial, with reserves of 400 million tonnes, produced
15 million tonnes of coal last year, exporting about a third to
customers including power stations and steel mills in Taiwan,
Japan, Korea, India and Europe.

Centennial shares ended up 18 percent at A$4.71, while
Banpu’s shares fell 4.1 percent to 654 baht.

JP Morgan is advising Banpu, and UBS is advising
Centennial, the source said.

JP Morgan spokesman Andrew Donohue declined to comment. A
UBS spokeswoman was not immediately available for comment.

Stock Basics

($1=1.102 Australian Dollar)
(Editing by Lincoln Feast)

UPDATE 3-Thai Banpu buys into Australia’s Centennial Coal