Abingdon, Va.-based Alpha itself agreed to a $2.7 billion takeover by Cleveland-based iron ore producer Cliffs Natural Resources. The deal drew objections from Cliffs' largest shareholder and was scuttled in November.

Some on Wall Street gave an early stamp of approval to the latest takeover bid.

"I want to thank you for letting us all release the breath that we have been holding regarding coal M&A for so long," Goldman Sachs analyst Justine Fisher said during the conference call.

Marshall University economist Cal Kent said big buyouts will likely remain rare, but consolidation will continue in the form of smaller deals.

Besides what Alpha is paying in stock for Foundation Coal Holdings Inc., it will assume $530 million in debt. The companies value the total transaction, including debt, at about $2 billion.

Linthicum Heights, Md.-based Foundation shares gained $4.79, or 20.61 percent, to close at $28.03. Alpha closed down $1.84, or 6.38 percent, at $27.02.

Shareholders of Foundation would receive 1.084 shares of the new company for each share held, or about $32.73 per share ¿ a 41 percent premium over Monday's closing price. Alpha shareholders would own about 59 percent of the combined companies.

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