Alpha Natural Resources announced on Jan. 29 plans to buy Massey Energy Co. for $8.5 billion, in a tie-up of two giant coal producers.
"Together we will be America's largest supplier of metallurgical coal for the world's steel industry and a highly diversified supplier of thermal coal to electric utilities in the U.S. and overseas," said Kevin Crutchfield, Alpha's CEO.
The deal approved by the boards of both firms places a value of $69.33 per share of Massey common stock, valuing the group at $8.5 billion, and would be a 21% premium to Massey's current share price.
After completion, Alpha would own 54% of the combined firm and Massey stockholders 46%. The deal still requires shareholder and regulatory clearance.
"The merger will bring together Alpha's and Massey's highly complementary assets, which include more than 110 mines and combined coal reserves of approximately five billion tons, including one of the world's largest and highest-quality metallurgical coal reserve bases," the firms said.
"Alpha and Massey believe the new entity will be well positioned to capitalize on strong global demand trends for coal including the metallurgical coal used in the steel manufacturing process. Further, the combination is expected to permit Alpha and Massey to benefit from geographical and asset diversification, including operations and reserves in Central and Northern Appalachia, the Illinois Basin and the Powder River Basin in Wyoming."
Alpha says it is the third largest U.S. coal producer.
Massey is the operator of the West Virginia mine where a gas explosion killed 29 people last year and is the fourth largest coal producer in the United States.
Copyright Agence France-Presse, 2011