Alpha, Massey now one

VIRGINIA producer Alpha Natural Resources is now the second largest coal reserve holder in the United States with the completion of its $US7.1 billion acquisition of fellow Virginia operator Massey Energy, after receiving overwhelming approval on Wednesday by both companies’ shareholders.
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Courtesy Alpha Natural Resources

Donna Schmidt

The takeover, first announced on January 29 after months of speculation on the future of Massey Energy, has created a premier US coal company as well as a global leader in metallurgical coal supply.

As outlined in the initial definitive merger agreement, Massey stockholders will now receive 1.025 shares of Alpha common stock and $10 in cash for each share of Massey common stock they owned at Wednesday’s closing.

Massey stockholders now own about 46%, while Alpha pre-merger stockholders now own about 54% of Alpha on a fully diluted basis.

Alpha now controls about 5 billion tons of reserves in central and northern Appalachia, the Illinois Basin and the Powder River Basin – making it the second largest reserve holder in the nation.

Alpha’s met coal reserve base is now among the world’s largest and highest quality, with diversified assets including about 150 coal mines and 40 preparation facilities.

The newly combined company’s pro forma revenues for 2010 of $6.9 billion also rank Alpha in the second place spot for US coal suppliers.

"Today's transaction is transformational for Alpha Natural Resources, the central Appalachian region and the US coal industry. Alpha is now a global industry leader,” Alpha chief executive officer Kevin Crutchfield said.

“This combination significantly enhances Alpha's industry position through the inclusion of complementary mining assets and a combined workforce that is 14,000 people strong. We are now twice the people, with twice the energy, powering the world."

Crutchfield said the company would continue to maintain focus on execution on all fronts including safety environmental stewardship, operational excellence and financial performance.

“We will immediately begin building upon our history of successful integrations, including implementing Alpha's unique employee-driven Running Right philosophy of safety and environmental stewardship across the businesses,” he said.

“With this acquisition, Alpha is well positioned to capitalize on strong global demand growth for both thermal and metallurgical coals, while delivering excellent quality and service to our domestic customers."