WILMINGTON, Del. (Reuters) – Contura Energy Inc and Alpha Natural Resources Holdings Inc said on Monday they agreed to merge, creating the largest U.S. producer of metallurgical (met) coal, used in steelmaking, and reuniting the two businesses that were split following a 2015 bankruptcy.
The deal comes as investors look for consolidation in an industry that is recovering from a deep downturn in 2015 and 2016, when several coal producers filed for bankruptcy in the wake of cheap natural gas and stricter regulations.
Under terms of the all-stock deal, Alpha shareholders will end up owning 46.5 percent of the merged entity. The two companies said they sold a combined 12.6 million tons of metallurgical coal in 2017, vaulting the merged company ahead of Coronado Resources Ltd of Vancouver.
The merged company will own 1 billion tons of coal reserves, according to a securities filing. The deal gives Alpha and Contura increased scale and financial muscle, and the merged company expects to list its common stock on the New York Stock Exchange when the deal closes, giving it capital for more acquisitions.
Contura’s stock, which currently trades over the counter, was unchanged at $66.50 per share in afternoon trading, giving the company a market capitalization of about $685 million, according to Eikon.