SOURCE: The Bedford Report

The Bedford Report

November 19, 2010 08:46 ET

Merger and Acquisition Speculation Heats Up the Coal Market

The Bedford Report Provides Analyst Research on Massey Energy & Peabody Energy

NEW YORK, NY--(Marketwire - November 19, 2010) -  In the past month several companies in the coal market have become the subject of Merger and Acquisition speculation. As companies get larger and experience diminishing returns in their core business, they are showing their willingness to utilize their large resource pools to acquire smaller companies in a race to diversify themselves. Given the limited opportunities for meaningful acquisitions, the companies in stronger financial positions, and the willingness to act, stand to gain the most from such activities. The Bedford Report examines the outlook for companies in the surging coal market and provides research reports on Massey Energy Co. (NYSE: MEE) and Peabody Energy Corporation (NYSE: BTU). Access to the full company reports can be found at:

Earlier this week an official with the China's coal association said the country's demand for coal will continue to increase in the next five years and is expected to reach 3.8 billion tonnes in 2015. The surprising surge in coal demand has sent coal prices up to two year highs and brought upon a wave M&A speculation.

Recently the board of directors of Massey Energy formed a committee to consider options for the company, which could include sale of the firm or remaining independent. Stifel Nicolaus & Co. analyst Paul Massoud noted that the coal miner could draw a price of $62 a share in a hypothetical offer by Cliffs Natural Resources Inc. Massoud thinks Cliffs would be interested to expand in central Appalachian coal development, and has said it would "consider opportunities."

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Another, though unsubstantiated rumor that surfaced last week was that Peabody Energy was considering buying James River Coal. Coincidentally, both Massey Energy and Peabody Energy recently expressed interest in selling some of their individual US mines to Coal India. 

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