RJB Mining in takeover talks

LAST month saw RJB Mining shares leap by more than 40% in the wake of a preliminary bid approach which could lead to an offer being made for the company. Shares rose from 48p before news of the talks began to break, to a 52-week high of 68p. At the time of writing the price had slipped back to a fraction under 60p, valuing the company at around £87.5 million.

The sudden rise in share price last month forced RJB, the UK's largest independently owned coal producer, to confirm that an approach had been made, but they stressed that discussions were at an exploratory stage and there was no certainty that any formal offer would be forthcoming.

Early reports in The Times newspaper claimed that Anglo American were the interested party, although its sister publication, The Sunday Times, later suggested that Peabody, the world's largest coal company, had emerged as the frontrunner.

As well as their mining assets, RJB's 50,000-acre land portfolio is also thought to have big attractions for property companies.

Whoever the potential bidder may be, analysts believe the two sides will struggle to agree a price and some have put RJB's net worth as high as 230p a share - althought this a far cry from the company's peak valuation of £900 million when shares reached 620p after privatization six years ago.

RJB currently produce around 25 million tonnes of coal a year from 13 deep mines and 13 opencast sites. Last year the company made a pre-tax loss of £130 million following a £141 million write-down in colliery values.

However, RJB now look to be on a more stable footing after securing, in principle, £70 million of government aid and signing the last of several key long-term contracts with the power generators.