Posts Tagged ‘m&a’

Massey Energy Shares Rallying On Acquisition

Mar 17, 2010 Uncategorized

Coal producer Massey Energy (MEE) is a strong performer today, on the company’s news that it has signed a definitive agreement to acquire Cumberland Resources, a privately held coal producer, for $960 million, in a cash and stock deal. Massey Energy is offering $460 million in cash and the balance, or $320 million, in Massey stock.

Cumberland Resources, which owns 416 million tons of coal reserves, had 2009 coal revenue of $550 million. The company posted 2009 EBITDA of $115 million.

Cumberland Resources produces both steam coal, which is used by power generating plants and metallurgical coal, which is used in the production of steel. Massey believes that the acquisition will strengthen its position in the metallurgical coal arena.

Cumberland currently produces 4.8 million tons of metallurgical coal annually and 800,000 tons of that is sold into the metallurgical coal market. After the acquisition, Massey will be producing 5 million tons of metallurgical coal.
Massey shares are up $2.95 to $53.17 for a gain in early trading.

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