CHARLESTON, W.Va. (AP) ¿ Alpha Natural Resources said Tuesday it plans to buy rival Foundation Coal for about $1.4 billion in an all-stock deal that would create the nation's third-largest coal producer.
Foundation Coal shares jumped nearly 21 percent.
Talk of another wave of consolidation in the coal industry has been growing louder in recent weeks and on Tuesday, Alpha Chief Executive Mike Quillen said the bid for Foundation reflected that need.Producers have wrestled with declining demand, falling prices and tight credit, not to mention increased environmental scrutiny under the administration of Barack Obama. "I think people had predicted that the Alpha-Foundation one was one that made a lot of sense," Quillen said in an interview. Combined, Alpha and Foundation would be well-financed ¿ they'd have approximately $743 million in cash and available credit ¿ and diversified. The companies would have 2.3 billion tons of coal reserves balanced between higher-profit Appalachian mines and high-volume western operations. Their 91 million tons of annual production from 59 mines would rank third behind Peabody Energy and Arch Coal.