Coal mining acquisitions see Arch Coal buying out International Coal Group for $3.4 billion. This will allow Arch Coal to boost coal production for steelmaking grade coal and benefit from the soaring prices and global demand. It will also make Arch Coal the second largest U.S. producer of metallurgical coal by nearly doubling its production by 2015.
The deal comes hot on the heels of Alpha Natural Resources buying out Massey Energy for $6.6 billion and Walter Energy’s agreement to buy Western Coal, a Canadian company for $3.3 billion. Coal acquisitions have been rocking the mining industry due to the profitability factor in the last few years.
The added income from the Arch Coal takeover of International Coal would roll into company coffers by the beginning of 2012. There would also be an annual cost saving of between $70-80 million. Chairman and Chief Executive Officer Steven Leer of Arch Coal said that by projection coal markets were going to be undersupplied in steam and met coal for the next five years.
Mr Leer said that the deal would give the combined company a boost in production that would be able to exploit the high coal prices and demand. Arch Coal will pay $ 14.60 per share for each share of International Coal. This is a 32 % premium to the closing stock price on Friday.