Alpha Natural Resources, the third largest U.S. coal producer, is reportedly close to acquiring rival Massey Energy for $7 billion. Massey, the largest coal producer in central Appalachia, closed with a market value of $5.84 billion on Friday. The Alpha Natural offer would value Massey at $68-$69 a share, well above the $57.23 closing price on Friday.
In late 2010, Virginia-based Massey (MEE) said it would explore strategic options, including a possible sale. The company saw its shares plunge following an explosion at its Upper Bigger Branch mine that killed 29 workers in the worst U.S. coal mine accident in more than three decades.
Massey shares have surged in the months following the blast helped by higher prices for metallurgical coal and speculation the company was a takeover target. While Massey was rumored to have several suitors, Alpha Natural (ANR) has been repeatedly viewed as the front-runner.
Alpha Natural is the largest U.S. producer of metallurgical coal. Massey shareholders will receive about 1.025 Alpha shares, plus $10 in cash for each share held, representing an almost 20 percent premium from Massey's closing share price on Friday, according to Bloomberg News.
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