Business Blog Posts

The deal -- the latest in a wave of consolidation sweeping the industry -- creates the second largest U.S. coal miner by market value, holding 110 mines and combined coal reserves of 5 billion tons. The deal is expected to be completed in mid-2011.

Massey shareholders will receive 1.025 Alpha share for each Massey share in addition to $10 a share in cash, for a value of about $69.33 a share, the companies said. That represents a 21 percent premium over Massey's closing share price of $57.23 on Friday.

Surging Asian demand for coal to fuel steel mills and power plants has made the sector one of the hottest for dealmaking over the past year. After the acquisition, Alpha will be the largest supplier of metallurgical coal, which is used in steel making, in the United States.

Alpha Chief Executive Kevin Crutchfield said in an interview the deal would create a global player in metallurgical coal -- a commodity the company believes should continue to generate profits for some time.

"In terms of the next decade, the world is going to remain structurally undersupplied in high-quality metallurgical coal. There's just not going to be any massive new supply coming on," Crutchfield said.

That, coupled with expectations of continued growth out of economies like India and China, should keep the market for the fuel strong, he said.

Massey, based in Richmond, Virginia, put itself on the block in November after posting a wider-than-expected third-quarter loss as a result of the explosion that killed 29 miners at its Upper Big Branch mine in West Virginia in April.

The company has been under scrutiny since the accident, which was the deadliest U.S. coal mining disaster in 40 years. The U.S. Justice Department and the state of West Virginia are investigating the blast and the company could face litigation from the families of the 29 miners.

In the months following the accident, Massey shares lost more than half their value, hitting a low of $25.87 in July. They have since bounced back above pre-explosion levels, helped by reports the company would likely be acquired.

COMFORTABLE WITH RISK

Crutchfield said that during the run-up to the deal, Alpha was able to gain access to Massey records and executives to study the risk involved in the purchase.

"At the end of the day, we were actually able to get comfortable with the exposed risk," he said, noting he believed Massey's estimate of up to $150 million in losses related to the blast was "appropriate."

Massey took a charge of $128.9 million last year in order to cover costs from the explosion, including workers' compensation and other compensation for the families of the miners and expected costs from litigation.

Massey has disputed claims by federal investigators that excessive coal dust fueled the deadly explosion and has said a natural gas leak caused the accident.

The deal -- the latest in a wave of consolidation sweeping the industry -- creates the second largest U.S. coal miner by market value, holding 110 mines and combined coal reserves of 5 billion tons. The deal is expected to be completed in mid-2011.

Massey shareholders will receive 1.025 Alpha share for each Massey share in addition to $10 a share in cash, for a value of about $69.33 a share, the companies said. That represents a 21 percent premium over Massey's closing share price of $57.23 on Friday.

Surging Asian demand for coal to fuel steel mills and power plants has made the sector one of the hottest for dealmaking over the past year. After the acquisition, Alpha will be the largest supplier of metallurgical coal, which is used in steel making, in the United States.

Alpha Chief Executive Kevin Crutchfield said in an interview the deal would create a global player in metallurgical coal -- a commodity the company believes should continue to generate profits for some time.

"In terms of the next decade, the world is going to remain structurally undersupplied in high-quality metallurgical coal. There's just not going to be any massive new supply coming on," Crutchfield said.

That, coupled with expectations of continued growth out of economies like India and China, should keep the market for the fuel strong, he said.

Massey, based in Richmond, Virginia, put itself on the block in November after posting a wider-than-expected third-quarter loss as a result of the explosion that killed 29 miners at its Upper Big Branch mine in West Virginia in April.

The company has been under scrutiny since the accident, which was the deadliest U.S. coal mining disaster in 40 years. The U.S. Justice Department and the state of West Virginia are investigating the blast and the company could face litigation from the families of the 29 miners.

In the months following the accident, Massey shares lost more than half their value, hitting a low of $25.87 in July. They have since bounced back above pre-explosion levels, helped by reports the company would likely be acquired.

COMFORTABLE WITH RISK

Crutchfield said that during the run-up to the deal, Alpha was able to gain access to Massey records and executives to study the risk involved in the purchase.

"At the end of the day, we were actually able to get comfortable with the exposed risk," he said, noting he believed Massey's estimate of up to $150 million in losses related to the blast was "appropriate."

Massey took a charge of $128.9 million last year in order to cover costs from the explosion, including workers' compensation and other compensation for the families of the miners and expected costs from litigation.

Massey has disputed claims by federal investigators that excessive coal dust fueled the deadly explosion and has said a natural gas leak caused the accident.

Massey shareholders will receive 1.025 Alpha share for each Massey share in addition to $10 a share in cash, for a value of about $69.33 a share, the companies said. That represents a 21 percent premium over Massey's closing share price of $57.23 on Friday.

The deal -- the latest in a wave of consolidation sweeping the industry -- combines two of the biggest companies in the Appalachian coal business, creating a company with 110 mines and combined coal reserves of 5 billion tons. The deal is expected to be completed in mid-2011.

Surging Asian demand for coal to fuel steel mills and power plants has made the sector one of the hottest for dealmaking over the past year.

Alpha's acquisition of Massey is "truly transformational," Kevin Crutchfield, Alpha's CEO, said in a statement. "Together, we are committed to creating a stronger company that has the scale to capitalize on further growth opportunities, succeed in a changing regulatory landscape and maintain the absolute highest standards in safety and environmental excellence."

Massey, based in Richmond, Virginia, has been under scrutiny by federal mine safety regulators since an explosion last April 5 in one of its West Virginia mines that killed 29 workers, the deadliest U.S. coal mining disaster in 40 years.

Massey disputed claims by federal investigators that excessive coal dust fueled the deadly explosion and has said a natural gas leak caused the accident.

Massey's former chief executive, Don Blankenship, who had been seen as opposed to selling the company, left at the end of last year.

Blankenship led Massey for 20 years and had been a lightning rod for criticism from environmentalists for championing surface mining, and from unions for the company's use of non-union labor.

The merger with Alpha will create annual cost savings of $150 million by the second year of operations, the companies said.

Morgan Stanley was lead adviser on the deal. Citigroup was also an adviser, the companies said. Alpha obtained $3.3 billion in committed financing from the two banks, which along with existing cash balances is enough to cover the cash payment for Massey shares, the statement said.

Alpha said the deal valued Massey at $8.5 billion, a figure that includes debt.

Recent deal activity in the sector includes Walter Energy's more than $3 billion deal to buy Canadian rival Western Coal Crop, and Rio Tinto's$3.9 billion bid for Africa-focused coal miner Riversdale Mining Ltd.

(Reporting by Ann Saphir; Editing by Peter Cooney)

In a statement on Saturday, Comcast said the transaction closed the previous day. To close the deal, Comcast, the No. 1 provider of video and residential Internet service in the United States, acquired a 51 percent stake in NBC Universal from General Electric Co.

Executives at Comcast spent more than 13 months working on getting the deal through a rigorous U.S. regulatory review process with the Federal Communications Commission and Justice Department.

Regulators, who approved the deal on January 18 with conditions, were concerned that an all powerful Comcast might stifle competition from new online video competitors including Hulu, in which it now owns a stake.

Among the conditions to which Comcast agreed: relinquishing management rights of its minority stake in Hulu. Hulu is co-owned by News Corp, Walt Disney Co and NBC Universal.

The newly created joint venture is called NBCUniversal LLC and its assets include NBC broadcast stations, cable channels like Bravo, USA and E!, the Universal movie studio as well as theme parks among other assets.

Comcast chief executive Brian Roberts said on Saturday that the transaction creates "the ideal entertainment and distribution company."

Comcast sees it as a potent combination alongside its 23 million video subscribers and nearly 17 million Internet subscribers.

The Philadelphia-based company hopes to take advantage of an evolving media world as viewing habits change and audiences expect to find their favorite entertainment on the TV set as well as the PC, tablet and smartphone.

(Reporting by Yinka Adegoke and Dan Levine; Editing by Eric Beech)

In a statement on Saturday, Comcast said the transaction closed the previous day. To close the deal, Comcast, the No. 1 provider of video and residential Internet service in the United States, acquired a 51 percent stake in NBC Universal from General Electric Co.

Executives at Comcast spent more than 13 months working on getting the deal through a rigorous U.S. regulatory review process with the Federal Communications Commission and Justice Department.

Regulators, who approved the deal on January 18 with conditions, were concerned that an all powerful Comcast might stifle competition from new online video competitors including Hulu, in which it now owns a stake.

Among the conditions to which Comcast agreed: relinquishing management rights of its minority stake in Hulu. Hulu is co-owned by News Corp, Walt Disney Co and NBC Universal.

The newly created joint venture is called NBCUniversal LLC and its assets include NBC broadcast stations, cable channels like Bravo, USA and E!, the Universal movie studio as well as theme parks among other assets.

Comcast chief executive Brian Roberts said on Saturday that the transaction creates "the ideal entertainment and distribution company."

Comcast sees it as a potent combination alongside its 23 million video subscribers and nearly 17 million Internet subscribers.

The Philadelphia-based company hopes to take advantage of an evolving media world as viewing habits change and audiences expect to find their favorite entertainment on the TV set as well as the PC, tablet and smartphone.

(Reporting by Yinka Adegoke and Dan Levine; Editing by Eric Beech)