Walter Energy to Acquire Western Coal for $3.3B


Walter Energy (NYSE:WLT) is buying Canadian rival Western Coal in a cash-and-stock deal valued at $3.3 billion.

Under the terms of the deal, Tampa-based Walter will acquire all the outstanding common shares of Vancouver’s Western Coal for $11.50 each in cash, representing a 56% premium to  Western’s closing price on Nov. 17, the day before their exclusive talks were made public.

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“This is a transformative transaction at a time when global demand for metallurgical coal is surging,” said Joe Leonard, interim chief executive of Walter Energy, who noted that Western’s production is expected to widen by more than 60% by fiscal 2013.

The combined company will produce more than 20 million tons of coal by 2012 and will have access to the high-potential Asian and South American seaborne metallurgical coal markets, the companies said in a joint statement.

Leonard said Western represents “a unique strategic fit,” complementing its large-scale, high-productivity mines.

“Our combined production capacity and geographic footprint leaves us extremely well positioned to benefit from favorable sector dynamics driven by increased steel production in markets such as China, India and Brazil. Bottom line, this is the right transaction at the right time,” he said.

The agreement has been unanimously approved by both companies’ boards of directors and is expected to be completed, pending customary closing conditions and regulatory and Western shareholder approvals, in the second-quarter of 2011.

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