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Alpha Natural Buying Foundation Coal For $1.4B

Both companies had been searching for partners, Foundation CEO James Roberts said.

"I don't think there's any other company out there that we could have merged with that ended up with the same results," Roberts said.

One result is size, which Roberts said was vital given the poor economy.

"In these times, with regulatory issues, legislative issues that we have to deal with, size really matters," he said.

The Environmental Protection Agency has begun scrutinizing permits for surface coal mines in the eastern U.S. and the Interior Department has taken steps to reverse one mining-friendly stream regulation adopted late in the Bush administration.

Quillen said the deal dilutes risk tied to environmental regulations. Alpha operates in West Virginia, Virginia, Kentucky and Pennsylvania, where resistance to surface mining is strongest. Foundation has mines in Wyoming.

Alpha and other large coal companies routinely talk about making acquisitions, but Teck Cominco's takeover of Fording Canadian Coal Trust last year and St. Louis-based Peabody Energy's purchase of Australia's Excel Coal in 2006 have been the exception. More common have been smaller deals such as Russian metals company Mechel OAO's recent purchase of Appalachian coal producer Bluestone Industries for $436 million plus 83.3 million preferred shares of stock.

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