Why Westmoreland Coal Company's Shares Popped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of coal producer Westmoreland Coal Company jumped as much as 15.5% today after the company announced an acquisition.
So what:Sherritt International is selling its coal-mining operations to Westmoreland for $435 million as part of a sale that will shed Sherritt of all of its coal operations. Westmoreland is acquiring seven thermal coal mines in Canada and a 50% stake in a carbon plant and production facility for char.
Now what: The deal is expected to be accretive (or add) to cash flow and will more than double the overall size of the business. The thermal coal market is still struggling around the world and long term I don't think those trends change. That's why I'm not buying into this bump today.
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Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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