After months of discussions, Vancouver's Western Canadian Coal Corp. (TSX:WTN) has made a formal bid to acquire London-U.K.-based Cambrian Mining plc (AIM:CBM) in a share deal worth approximately $120 million.
Under the proposed deal, Western is offering 0.75 a share for each Cambrian share.
According to Western Canadian, the acquisition will create a financially stronger and more diversified coal mining company that will combine its coal mines in B.C. with Cambrian's mines in West Virginia and the U.K.
The deal will add thermal coal to Western Canadian's product mix of hard coking and PCI coal. It will also as expand the company's markets in Asia, Europe and the U.S. As a result of the deal, Western Canadian's coal reserves will increase by 39% and its coal resources by 50%.
Western Canadian and Cambrian have had a close relationship over the years. Cambrian owns 34% of Western Canadian's common shares and $29 million of Western's convertible debentures. In January, Western Canadian provided a US$36 million secured loan to Cambrian to help Cambrian repay a loan with Investec Bank (UK) Limited.
The deal, which is subject to customary closing conditions and regulatory and shareholder approvals, is expected to close in early July 2009.
Western Canadian's share price range during the past week: between $1.27 and $1.37; 52-week high: $10.99; 52-week low: $0.36.