Walter Energy to Buy Western Coal for $3.3 Billion
Walter Energy Inc. (WLT), a southern Appalachia producer of coal for making steel, agreed to buy Canadian company Western Coal Corp. (WTN) for C$3.3 billion ($3.3 billion).
Walter Energy made an offer of C$11.50 per share in cash or 0.114 of a Walter Energy share for each share of Western Coal, Bloomberg News reported. The cash price is a 26% premium to the 20-day average price of Western Coal.
"The offer price is a decent premium to where it was trading beforehand," said Ian Henderson, who manages about $7 billion at JPMorgan Chase & Co (JPM). "For shareholders it's probably the best that they can get."
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The deal has approval from the boards of both companies.
Strong demand for steel in China has helped boost the price of coal used to make the alloy. The price of steelmaking, coal sold to Asia will rise 8% in the next quarter, according to Swiss bank UBS AG.
Walter Energy previously agreed to buy a 19.8% stake in Western Coal for $C630 million.
