Peabody Energy Corp (BTU.US) shares climbed 7% in pre-market trading on Tuesday after the company announced the termination of its $3.8 billion acquisition deal with Anglo American for coking coal assets, citing a fire incident at Australia's Ambrosia North mine earlier this year.

Peabody President and CEO Jim Grech stated that the two companies failed to reach agreement on revised terms to address the material adverse change caused by the fire. The modification was intended to compensate Peabody for the significant and long-term losses at the largest mine involved in the acquisition plan due to the fire incident.

The mine was originally scheduled to achieve 5.3 million tons of saleable production in 2025. However, Peabody indicated that no timeline has been established for resuming longwall mining operations at expected production levels and costs.

Peabody declared in May that the fire constituted a material adverse change, providing grounds for terminating the transaction. Last month, the company reiterated that there remains no clear timeline for operational recovery. Meanwhile, Anglo American contested this position, arguing that both the mine and equipment remained undamaged and disputing that the incident constituted a material adverse change.

The deal's collapse represents a significant setback for Anglo American, which agreed in November to divest its coal assets as part of a strategy to streamline and downsize operations, enabling greater focus on copper and iron ore businesses.