Nothing has been finalized yet, but Western Coal Corp. (TSX:WTN) could soon become one of the largest coal producers on the planet.
On Thursday morning, the Vancouver-based miner said negotiations were underway regarding a combination with Walter Energy Inc. (NYSE:WLT), a Florida-based mining company with annual revenue of approximately $1.2 billion.
The deal, which could have a total value of $3.3 billion, would see Western shareholders receive a mixture of cash and Walter shares valued at $11.50 per Western share.
At press time, Western’s share value had soared nearly 46% to $10.75 on volume of approximately 17 million.
The deal represents a 55.8% premium to Western’s closing price November 17.
“The combination would create one of the world’s largest pure-play, publicly traded producers of metallurgical coal with geographically diversified assets in Canada, the U.S. and the U.K.,” Western said in a release.
The company could not be reached for comment by press time, stating in a release it does not intend to “make any further announcements or communications” regarding the deal until an agreement has been reached or the transaction is ended.
Western has agreed to work with Walter for a period up to 14 days, expiring December 1, to hammer out a deal.
As a part of the deal, Walter has agreed to acquire 19.8% of Western’s shares for approximately $630 million.
The Vancouver company operates eight coalmines in total, three of which are located in northeast B.C. near Chetwynd and Tumbler Ridge.
Over the last year, Western has undergone a significant period of transition that included a merger with Britain’s Cambrian Mining plc, an overhaul of its executive team and the re-opening of its Willow Creek mine two months ahead of schedule.
In June, Business in Vancouver sat down with Western president and CEO Keith Calder to discuss the company’s recent success. (See “Western Coal Corp. primed for aggressive growth” – issue 1077, June 15 to 21.)
During the interview, Calder laid out his plans for the company and its growth prospects.
“Within three years, I see us being within the top tier of metallurgical coal producers worldwide,” Calder said at the time.