Massey Energy Company (MEE) Buying Rival For $640 Million
March 16, 2010 5:44 PM
Massey Energy Company (NYSE: MEE) announced on Tuesday that the coal producer had reached an agreement to acquire its rival Cumberland Resources Corp. for $960 million.
The acquisition is part of Massey Energy Company's strategy of gaining control of more high-value metallurgical coal assets, as demand in Asia causes shortages in Europe and South America.
Massey Energy Company plans to ship 2 million tons of coal to India this year and recently announced its first 80,000 ton shipment to China. The company will invest a further $160 million this year in a mining facility capable of producing 2 million tons of metallurgical coal per year.
The deal with Cumberland Resources Corp. will see Massey Energy Company buying its privately held rival for $640 million in cash and $320 million in stock.
Cumberland Resources Corp., which earned $92 million on revenue of $550 million in 2009, specializes in underground mining. Massey Energy Company will benefit from Cumberland's expertise because the Environmental Protection Agency' announced in 2009 that it would give surface mining permits greater scrutiny.
Shares of Massey Energy Company ended the day up nearly 2% at $50.22 before dropping slightly during after hours trading.
