Alpha Natural Resources, Inc.ANR
buys Massey Energy CompanyMEE
. Under the terms of the agreement, Massey stockholders will receive, at the closing, 1.025 shares of Alpha common stock and $10.00 in cash for each share of Massey common stock. Based on the closing share price of Alpha common stock as of January 28, 2011, the agreement placed a value of $69.33 per share of Massey common stock (implying $8.5 billion enterprise value for Massey) and represents a 21% premium to Massey's current share price. Upon completion of the transaction, Alpha and Massey stockholders will own approximately 54% and 46% of the combined company, respectively. The merger will bring together Alpha's and Massey's highly complementary assets, which include more than 110 mines and combined coal reserves of approximately 5 billion tons, including one of the world's largest and highest-quality metallurgical coal reserve bases. Alpha and Massey believe the new entity will be well positioned to capitalize on strong global demand trends for coal including the metallurgical coal used in the steel manufacturing process. Further, the combination is expected to permit Alpha and Massey to benefit from geographical and asset diversification, including operations and reserves in Central and Northern Appalachia, the Illinois Basin and the Powder River Basin in Wyoming. The resulting company will have an attractive financial profile with expected pro forma 2010 revenues of approximately $6.9 billion and the highest free cash flow generation of any pure-play U.S. coal company, a responsible balance sheet, and significantly enhanced scale with a combined enterprise value of approximately $15 billion. Stockholders and customers of both companies will also benefit from synergies which are expected to exceed an annual run-rate of $150 million within the second year of operations, as well as anticipated cash flow accretion in the first full year of combined operations.
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