Coal Winners and Losers: Alpha Natural Resources

The Alpha Natural Resources (ANR Quote) acquisition of Foundation Coal(FCL Quote) will create the nation's third largest coal producer, a consolidation that will help the sector as economies of size and synergies will drive efficiency, said an analyst on Tuesday.

Alpha Natural Resources said Tuesday it plans to buy Foundation Coal for about $1.4 billion in stock. Foundation Coal shares soared $4.76, or 21%, to $28.01 in afternoon trading, while shares of Alpha slid $1.88, or 6.5%, to $26.95.

Bill Burns, an analyst with Johnson Rice & Co., said that consolidation, especially in central Appalachia, is viewed as good, and pointed to some other signals for possible long-term sector recovery.

"The general feeling is that (the China stimulus package) is working a lot better than the U.S. stimulus package," Burns said. If China's economy recovers, this could translate to a material turnaround for manufactured imports and in turn, help the coal sector rebound....