The deal includes the assumption of about $530 million of debt.
The combined company will be the third-largest coal producer in the U.S., with 2008 pro forma revenue of $4.2 billion, the companies said in joint press release Tuesday.
Foundation stockholders will receive 1.084 shares of the new company for each share held, or about $32.73 a share. That price is a premium of 41% over Foundation Coal's closing price Monday.Alpha Natural stockholders will own 59% of the new company, while Foundation Coal shareholders will own the remaining 41%. Both boards approved the deal, which is targeted to close later this year.