Mergers and acquisitions keep occurring in what seems like a chain reaction in the energy industry. This time, coal companies are the key players in a merger worth $3.4 billion. Arch Coal has agreed to acquire International Coal Group in a $14.60 per share bid. The deal will make the consolidated company the second largest metallurgical coal suppliers in the U.S., and one of the top five producers internationally.
The merged company will have a capacity of 179 million tons of total coal shipments, $4.2 billion in revenue, and $925 million in profit based on the companies’ earnings in 2010.
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The $14.60 per share offered by Arch Coal to International Coal Group shareholders is a 32 percent premium over Friday’s closing price on the company.
Arch’s CEO Steven F. Leer believes the transaction “will provide a powerful platform for future organic net coal production growth; extend our operating portfolio into every major U.S. coal-producing basin…and solidify our position as one of the industry’s lowest cost producers.”
This deal marks the second billion-dollar coal merger this year. Massey Energy was acquired by Alpha Natural Resources in late January for $7.1 billion.