Mining Consolidation Continues
Alpha Natural Resources and Cleveland Cliffs will combine in a $10 billion combined cash and stock transaction.
July 16, 2008
Alpha Natural Resources and Cleveland-Cliffs mining companies have agreed to a merger in which Cleveland-Cliffs will acquire the outstanding shares of Alpha for $10 billion in cash and stock.
The combined company will be named Cliffs Natural Resources, with 40% of the company owned by Alpha shareholders and 60% owned by Cleveland-Cliffs shareholders.
In the transaction, Alpha shareholders will receive $128.12 per share, based on Cleveland-Cliffs’ closing stock price of $111.46 on Monday.
Alpha chairman and chief executive officer Michael J. Quillen said, “Together, Alpha and Cleveland-Cliffs will have the size, the management depth and the mining expertise to compete on the global stage as demand for raw materials continues to increase around the world. We look forward to working together with Joe Carrabba and the Cleveland-Cliffs management team to realize the substantial opportunities that this combination presents.”
Jones Day is legal counsel and J.P. Morgan Securities is financial advisor to Cleveland-Cliffs in the transaction. Cleary Gottlieb is legal counsel and Citi is financial advisor to Alpha Natural Resources.
JPMorgan Chase Bank, N.A. is providing $1.9 billion in financing for the transaction.
At press time, Cleveland-Cliffs stock was trading at $11.52, and Alpha had jumped from $94.92 at close on Tuesday to $106.02. Alpha employs 3,600.
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