The move comes following a scheme implementation agreement (SIA), between the two companies, wherein Endocoal shareholders will receive cash consideration of A$0.38 ($0.39) per Endocoal share.
The SIA is subject to necessary shareholder and regulatory approvals and the absence of a superior proposal.
Endocoal interim chairman Rodney Austin said the scheme implementation agreement is an important milestone for the company’s shareholders.
"The U&D Scheme is the culmination of Endocoal’s announced process of 28 May 2012 conducted by Macquarie Capital as its corporate adviser to review all asset and corporate transaction opportunities," said Austin.
"The U&D offer allows shareholders to receive a significant value premium to recent trading levels and benefit from the certainty of cash consideration.
"Both Endocoal and U&D recognise that the Offer is subject to a range of regulatory and shareholder approvals in Australia and China and, fully respecting those processes, both companies will work constructively with authorities to ensure that these are secured."
U&D Mining will also provide interim debt funding of A$4m($4.15m) to Endocoal, which it plans to employ for securing a mining lease for the Meteor Downs South Project in Queensland.
The transaction is expected to be complete in March 2013, on receipt of necessary approvals.
U&D Mining Industry (Australia) is a joint venture between Australia Kunqian International Energy and Daton Group Australia, a manufacturer of fertilizers.
Australia Kunqian International Energy is a wholly owned subsidiary of China Yima Coal Group, which intends to establish its coal operations in Australia.
U&D Mining Industry has also acquired EPC 818, a coal exploration tenement in the Isaac Region of Queensland earlier in February 2012.
