"After a careful review of a wide range of strategic opportunities, our board unanimously determined that this is the right course for our company," Phillips said. "The merger with Alpha offers Massey stockholders an immediate and substantial premium, as well as the opportunity to participate in the significant value creation opportunities our combination presents.
"We have always respected Alpha's passion for this business and we believe this is a natural and logical combination that has great upside for our members, communities, customers and other important constituents," Phillips said.
The announcement said the boards of Alpha and Massey have approved the terms of the transaction, and have recommended stockholder approvals of the deal. The transaction is expected to close in mid-2011. It is subject to federal regulatory approval, as well as approval by the stockholders of both companies.
Alpha has obtained $3.3 billion in financing from Morgan Stanley and Citi, which, in addition to existing cash balances, will be sufficient to finance the deal, the companies said.
Massey is probably the best known -- and most controversial -- coal operation in the country, as well as being among the largest in the Appalachian region. It has grown from 3,600 employees a decade ago to 7,300 today. Annual revenue has nearly tripled in that time, to $2.7 billion in 2009.
In the past two years alone, Massey has paid the largest fines ever for a coal-mining death case and for water pollution violations by a mining operator -- $4.5 million for the fatal Aracoma Alma No. 1 Mine fire and $20 million in a water pollution deal with the U.S. Environmental Protection Agency.
Also, Massey struggled in 2010 to deal with the fallout from Upper Big Branch, the worst U.S. coal-mining disaster in nearly 40 years.
While it is perhaps not as well known by the general public in West Virginia, Alpha ranked in 2009 as the fourth-largest coal producer in the United States.
Alpha has operations in West Virginia, Virginia, Kentucky, Pennsylvania and Wyoming. In July 2009, Alpha bought Foundation Coal Holdings for $2 billion to add low-cost steam coal to its existing metallurgical coal holdings.
Reach Ken Ward Jr. at kw...@wvgazette.com or 304-348-1702.