NHC to acquire Malabar Resources for ~A$1.8bn via all scrip scheme; retain Sell on valuation

NHC has entered into a binding Scheme Implementation Deed to acquire all Malabar Resources shares it does not already own (~26%) via an all-scrip scheme of arrangement. A fixed exchange ratio of 0.50 NHC shares per Malabar share implies ~A$1.8bn equity value for 100% of Malabar and ~A$2.4bn enterprise value. The transaction consolidates 100% of the Maxwell underground mine, approved for up to 8Mtpa ROM over 20+ years and targeting ~5.5Mtpa saleable at first-quartile seaborne thermal costs, alongside Malabar's underground team, port equity and adjoining tenements. We adjust FY27-29 EBITDA by 0%/-1%/-1% on lower long-run Maxwell saleable output of 5.5Mtpa and A$120mn of remaining capex; NAV falls 2% to ~A$4.19/sh and our 12m price target declines 2% to A$4.50. Although accretive, NHC trades at ~1.5x NAV, discounts ~US$135/t thermal coal versus our US$105/t long-run estimate, and at ~6.5x NTM EBITDA versus the global peer median of ~5x; we retain Sell.