The exclusivity agreement announced November 18 which expired December 1 has been pushed out, though neither operator confirmed how much more time would be given.
“Both companies are working exclusively with each other toward the negotiation of a definitive agreement to give effect to Walter's proposal for a potential business combination,” Western said.
Walter announced last month that it had bid $US3.2 billion ($C3.3 billion) in cash and stock to acquire Western in a deal that, if successful, would create a North American and global steelmaking coal giant.
The combined company would hold diversified underground and surface assets in the UK as well as the US and Canada, and have strong Asian, South American, North American and European market positions.
In total, Walter and Western have coal reserves of about 285 million tons on a pro forma basis. Walter produces about 7Mt of premium metallurgical coal, with organic expansion plans expected to increase that to as much as 9.5Mt in 2012, while Western expects to produce 6.7Mt for the fiscal year ending March 2011 and has growth plans to meet 11Mt over the fiscal year ending March 2013.
In a separate transaction, Walter purchased common shares from Audley Capital affiliates representing 19.8% of Western’s outstanding shares for $C11.50 per share, or total consideration of $C630 million ($US615 million), bringing the total enterprise value for the buyout proposal to $US3.2 billion.
Walter interim chief executive Joe Leonard said last month that a deal with Western would be “transformational” for the Alabama company.
"The combined company would be the leading, publicly traded 'pure-play' metallurgical coal producer in the world, with unique and strategic access to steel-producing markets in both the Atlantic and Pacific basins,” he said.
“The transaction would meaningfully diversify both companies' operating and development portfolios and provide new business opportunities which might not be available to either company on a stand-alone basis.”