Alpha snaps up Massey in £4.5bn deal
ALPHA Natural Resources has agreed to a $7.1bn (£4.5bn) deal to buy Massey Energy, which was rocked by a deadly coal mining accident last year.
The deal – the latest in a wave of consolidation sweeping the industry – creates the second largest US coal miner by market value, holding 110 mines and combined coal reserves of 5bn tonnes. The deal is expected to be completed in mid-2011.
Massey shareholders will receive 1.025 Alpha share for each Massey share in addition to $10 a share in cash, for a value of about $69.33 a share, the companies said. That represents a 21 per cent premium over Massey’s closing share price of $57.23 on Friday.
Surging Asian demand for coal to fuel steel mills and power plants has made the sector one of the hottest for dealmaking over the past year. After the acquisition, Alpha will be the largest supplier of metallurgical coal, which is used in steel making, in the US.
Alpha chief executive Kevin Crutchfield said the deal would create a global player in metallurgical coal – a commodity the company believes should continue to generate profits for some time.
“In terms of the next decade, the world is going to remain structurally undersupplied in high-quality metallurgical coal. There’s just not going to be any massive new supply coming on,” Crutchfield said.
Massey, based in Richmond, Virginia, put itself on the block in November after posting a wider-than-expected third-quarter loss as a result of the explosion that killed 29 miners at its Upper Big Branch mine in West Virginia in April.