Arch Resources ARCH-N on Wednesday agreed to merge with Consol Energy CEIX-N in an all-stock transaction, creating a North American coal mining giant valued at more than $5 billion.
Consol will issue 1.326 of its common shares for each share of Arch Resources, which Reuters calculates (as of last closing price) represents a value of approximately $125.61 per share.
The new company will be called Core Natural Resources and will trade under a new ticker symbol that the companies have yet to announce.
Consol Energy shares rose 2 percent in premarket trading, while Arch Resources shares rose 3.4 percent.
Due to strict emissions regulations, little investment has been made in new coal mines to date. Nevertheless, the fossil fuel is expected to remain a part of the energy mix in the coming years.
Together, the two companies would have sold around 101 million tonnes of coal in 2023.
The merged company would have 11 mines in six states that produce coal for heat generation in power plants and for steel production.
The deal is expected to generate annual cost and operating savings of $110 million to $140 million within six to 18 months of closing, which is expected in the first quarter of 2025.
Arch shareholders will own approximately 45 percent of the merged company, with the remainder belonging to Consol shareholders.
Due to continued strong demand, particularly for coking coal, dealmaking in this sector has gained momentum over the past year.
Commodity trader Glencore completed its deal to buy Canadian company Teck Resources’ coal assets earlier this year, while Anglo American is looking for buyers for its Australian coal mines after rejecting BHP’s $49 billion takeover offer earlier this year.
