UPDATE 2-Massey buying Cumberland Resources for $960 mln
* Massey to buy privately held coal miner Cumberland
* To pay $960 mln in cash and stock for deal
* Massey warns Q1 to be below expectations
(Adds background, earnings warning)
NEW YORK, March 16 (Reuters) - Coal miner Massey Energy Co MEE.N signed a deal on Tuesday to buy privately held Cumberland Resources Corp for $960 million in cash and stock, in order to boost its reserves of coal used for steel-making.
Massey also warned it expects its first quarter earnings to be below Wall Street estimates.
Virginia-based Massey will pay $640 million in cash and $320 million in stock for Cumberland, which has an estimated 416 million tons of coal reserves.
More than half of those reserves are estimated to have have metallurgical coal qualities, Massey said. Cumberland's coal mines are in Southwestern Virginia and Eastern Kentucky.
Massey said last month it was sharpening its focus on metallurgical coal because of rising demand from global steelmakers.
CEO Don Blankenship said then the company had identified several potential customers in Asia and the Atlantic basin, noting that emerging economies such as China, India and Brazil are hungry for steel.
Metallurgical, or coking coal, is used to fuel blast furnaces in which steel is made.
After the deal, Massey will have an estimated total reserve base of 2.9 billion tons of coal, about 1.3 billion tons of which is metallurgical coal, the company said.
Massey said it will buy Cumberland free of debt. It said the deal will add to earnings per share beginning this year, but did not disclose how much.
But the company said its results for the first two months of the quarter were worse than expected, due to weather-related disruptions of coal production and shipments. It expects first quarter earnings to be below Wall Street expectations.
Massey's earnings are expected to be about 42 cents a share, according to Thomson Reuters I/B/E/S/.
The Cumberland deal is the second major deal by a coal company this week. Consol Energy Inc (CNX.N) agreed to buy Dominion Resources Inc's (D.N) Appalachian natural gas properties for $3.48 billion in cash on Monday, giving Consol a leading position in the growing Marcellus Shale field.
- Man called Bitcoin's father denies ties, leads LA car chase
- Florida mayor fights backyard gun ranges in 'Gunshine State'
- Ukraine standoff intensifies, Russia says sanctions will 'boomerang' |
- Apple loses bid for U.S. ban on Samsung smartphone sales
- 'Everything is fine', Pistorius told guard after shooting girlfriend |