Peabody Energy (NYSE: BTU) recently wrapped up the offer and the financing to close its acquisition of Australia's Macarthur Coal. Peabody is paying $5 billion for the coal miner after 90% of Macarthur's shareholders agreed to sell. The 90% threshold triggered a bump in the offer price and means Peabody can require remaining shareholders to sell.

This deal is clear evidence that business deals play on a global stage. The cast includes the U.S. and Australian leads supported by firms from Europe, China, and South Korea. This deal had been a joint venture between Peabody and Luxembourg-based ArcelorMittal (NYSE: MT). In late October, the steel giant backed out of the deal, leaving Peabody to go it alone. Macarthur's largest shareholder, China's Citic Resources, tendered its 25% of Macarthur earlier in October. Holdouts included South Korean steel giant POSCO (NYSE: PKX), which owns 7% of Macarthur.

Peabody is paying about 20 times trailing earnings for the deal. That's a steep premium to Peabody's own multiple of 10 times and to the eight of Australian-based megaminers Rio Tinto (NYSE: RIO) and BHP Billiton (NYSE: BHP). However, the price is in line with recent comparable acquisitions.

The deal adds 185 million tons to Peabody's Australian coal reserves and bumps production by 5 million tons/year of metallurgical coal. The vast majority of Macarthur's coal production feeds pulverized coal injection for steel production. PCI replaces higher cost coking coal and reduces coal consumption in steelmaking. Most of Macarthur's coal finds it way to Korea, Taiwan, Japan, China, and Brazil.

In addition to a leading position in PCI coal, Macarthur has a solid balance sheet with more than AU$300 million in net cash on the books as of the latest annual report.

This one is tough to score. The deal is expensive, but it's in line with other acquisitions and Peabody grows reserves and production to meet growing met coal demand. The leads from other players are mixed. ArcelorMittal opted out and Citic Resources was an early seller, but POSCO apparently doesn't want to sell. If South American and Asian economies keep growing, this deal works well. If we fall into a global recession, the acquisition looks expensive.

I don't know which way the global economy will turn, but Peabody looks cheap, it's picking up a strong position in a growing market, and the net cash on Macarthur's balance sheet is icing on the cake. That's enough for me to give Peabody an outperform call on my CAPS page.

Tag along if you like , and keep an eye on how the pick performs over the quarters and years to come.