* 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 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
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.
Massey shares fell 2.4 percent after the close of regular
(Reporting by Michael Erman and Anna Driver; editing by Steve
Orlofsky and Andre Grenon)