Situation

A coal mining company had recently been purchased by a large energy holding company, but the parent’s strategy suddenly changed, resulting in the coal company no longer being considered a strategic investment, and the parent wished to divest. Companies in this industry were no longer in favor, and certain coal reserves of this company were viewed as speculative. The parent company was in danger of selling at a loss.

Solution

A NextLevel partner led a competitive sale process using a regional investment bank specializing in the coal industry. Seven potential target companies were identified as possible buyers and these were studied for potential synergies in reserves, operations and markets with the company to be sold. At the same time, development of certain coal reserves of the company to be sold were brought to a more mature stage. This made the company more attractive to some of the target buyers.

Results

  • Serious bids were received from three of the target companies, which were all brought through due diligence and negotiation on parallel paths to maintain competitive tension.
  • The coal company was sold at a 10 percent premium to its original acquisition cost 18 months earlier.

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