Arch Coal to buy International
ARCH Coal, the second largest US coal producer, will buy smaller peer International Coal Group for $3.4bn (£2.04bn), the companies said yesterday.
Arch will pay $14.60 per share for International Coal, a 32 per cent premium to the closing stock price on Friday. The companies expect the deal to close in the second quarter.
The news sent International Coal’s shares soaring 30 per cent to $14.39 in early trading on the New York Stock Exchange, while Arch fell 0.2 per cent to $34.24.
The International Coal deal would make Arch one of the top five global coal producers and marketers, with shipments of 179m tonnes based on 2010 figures, it said.
The deal should benefit Arch Coal over time, particularly as prices for metallurgical, or “met coal,” are expected to remain strong because of rising global demand from steel makers.
“We expect the majority of earnings to ultimately come from the combined company’s met coal platforms, and given our positive view on met coal, we view this quite positively,” Brean Murray Carret & Co analyst Jeremy Sussman said.