Why did a major investor just offload $157 million in Whitehaven shares?

Whitehaven announced a $5 billion acquisition of BHP coal assets yesterday.

| More on:
Businessman walks through exit door signalling resignation

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Whitehaven Coal Ltd (ASX: WHC) shares are 1.78% lower on Thursday amid news that a major investor has sold $157 million in stock.

There is media speculation that the sale is a protest against the coal miner's purchase of more coal assets.

The Whitehaven share price is currently $7.44.

Major investor hits the sell button

As we reported yesterday, Whitehaven has proposed a $5 billion acquisition of the Daunia and Blackwater metallurgical coal mines owned by BHP Group Ltd (ASX: BHP) and Mitsubishi Alliance (BMA).

Whitehaven shares surged as high as 15% on the news, with management describing the deal as a "highly attractive acquisition for Whitehaven and is expected to be materially earnings accretive".

This morning, the Jefferies trading desk sold 21 million Whitehaven shares for about $157.5 million shortly after market open, according to the Australian Financial Review (AFR).

The trade represented about 2.5% of the company.

The AFR speculates that the seller could be hedge fund Bell Rock Capital, which opposed the BHP buy-up.

It's also possible that the seller may be another investor, who might have seen yesterday's surge in the Whitehaven share price as an opportunity to divest out of coal at a favourable price.

Why Whitehaven wants more coal in the era of decarbonisation

Whitehaven beat several other bidders for the coal assets. The AFR reports that Yancoal Australia Ltd (ASX: YAL) and Coronado Global Resources Inc (ASX: CRN) also made bids.

Management described "significant value upside with attractive growth opportunities in Queensland's Bowen Basin. This includes synergies with Whitehaven's Winchester South development project".

Whitehaven Coal's CEO and managing director, Paul Flynn, said the deal was "compelling" and "accelerates our strategy, transforms our company and delivers substantial value for our shareholders".

Flynn explained the reasoning behind the purchase:

This transformational acquisition will pivot our portfolio towards metallurgical coal, which has been a core pillar of our strategy for many years making this a better balanced business.

Our thermal coal business remains strategically important as we continue to provide much-needed coal products to support the global energy transition and as customers seek our high-quality and high-CV products to limit their emissions.

Whitehaven expects to close the deal before the end of FY24.

Whitehaven shares in 2023

The Whitehaven share price has fallen 16% in the year to date, alongside many other ASX coal shares.

Coal prices have been falling and are down by almost 65% over the past 12 months.

Motley Fool contributor Bronwyn Allen has positions in BHP Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

An executive stands looking out a glass window over the city.
Best Shares

The ASX bosses getting richer on the back of soaring ASX shares

These founders and CEOs made money hand over fist last financial year...

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

These ASX shares could rise ~20% to 40%

Analysts believe these shares could generate big returns for investors.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

5 mini houses on a pile of coins.
Share Market News

Here's how the ASX 200 market sectors stacked up last week

ASX real estate shares were strongest amid a volatile week during which the ASX 200 set a new record.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Broker Notes

Which beaten down ASX 200 share did Goldman Sachs just upgrade to a buy rating?

The broker has become more bullish on this stock following last week's update.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Best Shares

The best ASX shares to invest $1,000 in right now

Analysts think that putting your money into these stocks could be a smart move.

Read more »

green etf represented by letters E,T and F sitting on green grass
Share Market News

4 ASX ETFs to buy for FY25 and beyond

Could these ETFs be top options for investors looking for long term picks?

Read more »

A smiling woman sips coffee at a cafe ready to learn about ASX investing concepts.

How I'd invest $10,000 in ASX shares right now

I’m bullish about the prospects of these stocks.

Read more »