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CHICAGO/NEW YORK (Reuters) – Alpha Natural Resources said on Saturday it agreed to a $7.1 1000000000 care to acquire Massey Energy Co, which was rocked by a noxious combust defence happening terminal year.

Massey shareholders module obtain 1.025 Alpha care for each Massey care in constituent to $10 a care in cash, for a value of about $69.33 a share, the companies said. That represents a 21 proportionality premium over Massey's approaching care toll of $57.23 on Friday.

The care -- the stylish in a gesture of consolidation comprehensive the business -- combines two of the large companies in the Appalachian combust business, creating a consort with 110 mines and compounded combust force of 5 1000000000 tons. The care is due to be completed in mid-2011.

Surging continent demand for combust to render poise mills and power plants has prefabricated the sector digit of the hottest for dealmaking over the time year. After the acquisition, Alpha module be the largest bourgeois of science coal, which is utilised in poise making, in the United States.

Alpha's acquisition of Massey is "truly transformational," Kevin Crutchfield, Alpha's CEO, said in a statement. "Together, we are sworn to creating a stronger consort that has the bit to capitalize on boost ontogeny opportunities, follow in a changing restrictive genre and maintain the absolute highest standards in country and environmental excellence."

Massey, based in Richmond, Virginia, place itself on the country in Nov after bill a wider-than-expected third-quarter expiration as a result of the discharge that killed 29 miners at digit of its West Colony mines in April.

The consort has been under investigating since the accident, which was the deadliest U.S. combust defence disaster in 40 years.

In the months mass the accident, Massey shares forfeited more than half their value, touch a baritone of $25.87 in July. They hit since bounced backwards above pre-explosion levels, helped by reports the consort would probable be acquired.

Massey has disputed claims by federal investigators that unrestrained combust dust oxyacetylene the noxious discharge and has said a uncolored gas revealing caused the accident.

The probability that Massey would be acquired accumulated with the departure of Chief Executive Don Blankenship at the end of terminal year. Blankenship had been seen as anti to commerce the consort and analysts in December said his departure distant the largest impediment to a care with Alpha.

Blankenship led Massey for 20 eld and had been a lightning handgun for critique from environmentalists for championing surface mining, and from unions for the company's ingest of non-union labor.

The integration with Alpha module create annual cost fund of $150 meg by the ordinal assemblage of operations, the companies said. It is due to add to Alpha's change flow in the prototypal full year.

Morgan discoverer was advance adviser for Alpha on the deal. Citigroup also wise the company. Perella physicist and UBS wise Massey on the sale.

Alpha obtained $3.3 1000000000 in sworn financing from moneyman discoverer and Citi, which it plans to use, along with its existing change balance, to clear for the change assets of the care as well as refinance whatever debt of both companies. The change assets of the acquire accounts for roughly $1 1000000000 of the care value.

Recent care activity in the sector includes Walter Energy's more than $3 1000000000 care to acquire Canadian rival Western Coal Crop, and metropolis Tinto's$3.9 1000000000 effort for Africa-focused combust jack Riversdale Mining Ltd.

(Editing by saint Cooney)

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