Top U.S. coal miner Peabody Energy raised its offer for Australia's Macarthur Coal to $3.27 billion, but the new offer was below Macarthur's market price, suggesting the bidding could go higher.

The move came as Peabody tried to thwart Macarthur's plan to take over smaller rival Gloucester Coal in a deal that would give Hong Kong-based commodities firm Noble Group a 24.6 percent stake in Macarthur for a much lower price.

Peabody and Noble both want to get their hands on Macarthur, which is the world's biggest exporter of pulverized, or PCI, coal, controlling a third of the global supply that is in demand from steelmakers.

Macarthur said it would consider Peabody's sweetened offer, but told shareholders to take no action.

The complex saga is the latest in a flurry of coal deals in Australia, which have seen the number of large independent local coal producers dwindle as mining majors turn to acquisitions to satisfy booming Asian demand.

Peabody raised its offer by A$1 to A$14 a share less than a week after Macarthur rejected its first approach as too low. Investors and analysts said the new bid was highly unlikely to succeed as it was below Macarthur's price, before a trading halt on Tuesday, of A$14.87. Macarthur shares later resumed trading, gaining 1.6 percent to A$15.10.

It's very difficult to see $14 having any traction. It seems to me a huge misread in terms of where they are pitching and what the market is prepared to pay for the stock, said Tim Schroeders, portfolio manager at Pengana Capital, which does not own shares in Macarthur.

Key to Peabody's latest bid is the stance of Macarthur's top three shareholders -- China's CITIC Resources Holdings <1205.HK> and steel giants ArcelorMittal SA and South Korea's POSCO <005490.KS> -- who together own 47.3 percent of Macarthur.

All three had declined to comment on Peabody's first offer last week. On Tuesday, a source at POSCO said the steelmaker wanted to keep its stake in Macarthur. We want to remain as a long-term shareholder, said the source, who had direct knowledge of the matter but declined to be identified.

At A$14 a share, Peabody's offer was well below the roughly A$20 a share that POSCO and ArcelorMittal paid to get into Macarthur two years ago.

Macarthur is being advised by JPMorgan, while Rothschild Australia is advising Peabody.

SPOILER

Noble's plan to sell its 87.7 stake in Gloucester to Macarthur was thrown into jeopardy last week when Peabody said its bid for Macarthur was conditional on Macarthur dropping its bid for Gloucester.

Peabody on Tuesday urged Macarthur to delay an April 12 vote on the Gloucester takeover, saying its A$14 a share offer was worth 44 percent more than the value of Macarthur shares implied in the Gloucester takeover plan.

Peabody will either need to make a binding offer or increase the offer high enough to obligate Macarthur to delay the shareholder vote, said Tom Sartor, analyst at RBS Morgans in Brisbane. But I don't think the A$14 bid is a high enough offer to force Macarthur to reconsider its position.

Macarthur said next Monday's shareholder vote on the Gloucester plan would go ahead.

Noble prepared itself for defeat by Peabody by making an offer on Tuesday to buy out Gloucester at A$12.60 a share, in a deal valuing Gloucester at A$1.02 billion -- if the Macarthur deal fell through.

It could be a move by Noble, who may believe that Peabody will eventually be successful in acquiring Macarthur, said Andreas Bokkenheuser, analyst at UBS in Singapore.

In that case, Noble could lose the potential marketing rights of Macarthur's coal, which up until now has been viewed as a long-term positive for the company.

Noble shares rose 0.6 percent to S$3.21 in a Singapore market <.FTSTI> that was up 0.2 percent.

(Additional reporting by Victoria Thieberger in MELBOURNE and Saeed Azhar in SINGAPORE)

(Editing by Balazs Koranyi and Ian Geoghegan)

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