JOHANNESBURG (miningweekly.com) － US coal producers struck a deal over the weekend that would see Alpha Natural Resources buy rival miner Massey Energy for $7,1-billion in shares and cash.
The deal would transform Alpha into one world’s largest producers of coal used for stemaize roller mill for sale in zimbabwe elmaking at a time when supply has taken a dip owing to the damaging floods in Australia’s Queensland region.
Rumours about Alpha making an offer for Massey, the company which owns the Upper Big Branch mine where 29 people died last April, has been doing the rounds for months.
It was also said that the world’s largest steelmaker ArcelorMittal and Indian coal and steel companies were interested in a deal with Massey.
“After careful review of a wide range of strategic opportunities, our board unanimously determined that the deal with Alpha would be the right course for the company. The merger with Alpha offers Massey stockholders an immediate and substantial premium, as well as the opportunity to participate in the significant value creation opportunities,” said Massey CEO Baxter Phillips.
Massey shareholders would receive 1,025 Alpha shares in addition to $10 a share in cash. The agreement valued Massey shares at $69,33 a share, implying an $8,5-million value, which represented a 21% premium to the company’s closing price of $57,23 a share on Friday.
Upon completion, Alpha would hold 54% and Massey 46% of the combined company, which would include more than 110 mines and combined coal reserves of about five-billion tons.
Alpha CEO Kevin Crutchfield described the transaction as transformational, adding that it would lead to the creation of the biggest supplier of metallurgical coal in the US, together with thermal coal supplies for power utilities in the US and overseas.
"We believe the transaction has the potential to create long-term value for current and future Alpha shareholders, as global met markets remain structurally tight while thermal prices strengthen," analysts at Jeffries & Co wrote in a note.
The transaction is expected to be concluded by midyear, subject to approval by each company's shareholders and customary regulatory approvals and closing conditions.