Struggling Massey agrees to takeover
By Andrew Vanacore and Tim Huber |
January 31, 2011, Monday
|
Print Edition
Print Edition
MASSEY Energy Co, struggling with losses after an explosion that killed 29 workers at a West Virginia coal mine last spring, has agreed to be taken over by Alpha Natural Resources Inc, America's third largest coal producer.
Alpha is paying US$7.1 billion in cash and stock for Massey, which operates 19 mining complexes in Virginia, West Virginia and Kentucky including the Upper Big Branch mine where the April 5 disaster occurred.
Alpha is offering 1.025 share of its stock for each share of Massey, plus US$10 per share in cash. Together, that represents a bid of US$69.33 per share, a 21 percent premium over Massey's closing share price on Friday.
In an interview, Alpha CEO Kevin Crutchfield said the acquisition will offer greater access to international markets. Shortages of coal for making steel have driven up prices around the world, a trend on which Alpha hopes to capitalize.
"We sell into 20-some countries now and that will increase significantly," Crutchfield said.
Asked about safety concerns at Massey's operations, Crutchfield said: "We try to let our performance speak for itself. Nobody is perfect, but we have a very good record regarding safety and a good working relationship with regulators." He added: "Massey has a lot of great people who want to do the right thing."
A sale of Richmond, Virginia-based Massey was expected even before the sudden retirement last month of Don Blankenship, the company's CEO.
The company's losses since the disaster were another factor leading to its sale. Massey lost a total of US$130 million in the second and third quarters of last year.
Alpha is paying US$7.1 billion in cash and stock for Massey, which operates 19 mining complexes in Virginia, West Virginia and Kentucky including the Upper Big Branch mine where the April 5 disaster occurred.
Alpha is offering 1.025 share of its stock for each share of Massey, plus US$10 per share in cash. Together, that represents a bid of US$69.33 per share, a 21 percent premium over Massey's closing share price on Friday.
In an interview, Alpha CEO Kevin Crutchfield said the acquisition will offer greater access to international markets. Shortages of coal for making steel have driven up prices around the world, a trend on which Alpha hopes to capitalize.
"We sell into 20-some countries now and that will increase significantly," Crutchfield said.
Asked about safety concerns at Massey's operations, Crutchfield said: "We try to let our performance speak for itself. Nobody is perfect, but we have a very good record regarding safety and a good working relationship with regulators." He added: "Massey has a lot of great people who want to do the right thing."
A sale of Richmond, Virginia-based Massey was expected even before the sudden retirement last month of Don Blankenship, the company's CEO.
The company's losses since the disaster were another factor leading to its sale. Massey lost a total of US$130 million in the second and third quarters of last year.
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