CHARLESTON, W.Va. -- Coal giant Arch Coal announced Monday it is buying Scott Depot-based International Coal Group, reversing its move out of the Appalachian coalfields in another major industry consolidation.
The $3.4 billion deal also gives St. Louis-based Arch Coal a larger stake in the Illinois coal industry to go with its position as a leading producer of surface-mined coal from Wyoming's Powder River Basin.
"The acquisition of ICG is a significant strategic step that strengthens Arch's position as a world-class, global coal franchise positioned for growth," said Arch Coal CEO Steven F. Leer.
Leer touted the addition of geographic diversity in Arch Coal's portfolio and emphasized the acquisition would increase his company's participation in global markets for coal used to make steel.
Under the deal, Arch Coal would purchase all outstanding shares of ICG for $14.60 per share. The deal is subject to regulatory approvals and is expected to close sometime during the second quarter of 2011.
A potential Arch-ICG buyout has been rumored in the trade press, but hasn't gotten nearly as much attention as Alpha Natural Resources' purchase of Massey Energy, which is scheduled for a shareholder vote June 1.
If its purchase of ICG goes through, Arch would become the second largest producer of metallurgical coal in the U.S., behind only the combined Alpha-Massey company.