Under the terms of the merger agreement, Massey stockholders will receive 1.025 shares of Alpha stock and $10 in cash for each share of Massey stock. Alpha will own 54 percent of the combined company and Massey will own 46 percent.
Alpha's successful bid valued Massey stock at $69.33 a share, or more than 20 percent over Massey's closing price the day before the deal was announced in late January.
The transaction has a total value of about $8.5 billion, with Alpha paying $7.1 billion in cash and stock and also assuming about $1.4 billion in debt, company officials have said.
One study, by an analyst working for families of the miners who died at Upper Big Branch, said that Massey insiders -- including now-retired CEO Don Blankenship -- would pocket $196 million in payouts and other committed benefits if the transaction is approved.
Technically, only Massey shareholders are being asked to formally approve the merger agreement. Alpha stockholders are voting on a proposed amendment to their company's certificate of incorporation to increase the number of authorized shares of Alpha common stock to 400 million shares and approve the issuance shares pursuant to the merger agreement.
While smaller than Alpha, Massey is probably better known and certainly more controversial. In the last 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. Massey's operations in Southern West Virginia have also been the main target of a two-year-old peaceful civil disobedience campaign against mountaintop removal mining.
While Alpha has avoided a huge disaster like Upper Big Branch, the company narrowly avoided such an incident in May 2009, when seven workers were trapped underground for more than 24 hours by a mine flood in Mingo County. Federal regulators cited the company for improper maintenance of outside drainage systems that allowed heavy rain to inundate the underground tunnels.
And in January 2007, Alpha's Brooks Run subsidiary was cited for major safety violations following a roof collapse that killed two workers at an underground mine in McDowell County. More recently, an Alpha contractor admitted lying to federal investigators about training practices at that same operation, the Cucumber Mine. And earlier this year, another man pleaded guilty to lying about having a foreman's license when performing safety examinations at Alpha's Poplar Ridge Mine in Webster County.
Like Massey, Alpha boasts that most of its coal production comes from "union free" operations. But, two unionized underground mines in Pennsylvania, purchased in July 2009 from Foundation Coal, are Alpha's largest producers outside of Wyoming's Powder River Basin.
The buyout deal has also drawn scrutiny because of Alpha's plans to hire several top Massey executives and mine managers who played major roles in overseeing the Upper Big Branch Mine prior to the April 5, 2010, explosion that killed 29 miners.
Reach Ken Ward Jr. at kw...@wvgazette.com or 304-348-1702.