Western Coal Corp. (TSX:WTN) is going to expand its presence in Britain after it announced a deal this morning to buy U.K.-based Energybuild Group plc (AIM:EBG).
The all-share deal valued Energybuild at Ł54.4 million, or $82.7 million, and Western president and CEO Keith Calder said the buyout fits with his company’s “accretive” growth strategy.
“With a tremendous coal resource base in which to build Energybuild upon, we believe applying Western's considerable technical and financial strength will help in developing the project faster and achieve shareholder value earlier for Western shareholders,” Calder said in a release.
Western already owns 54.7% of Energybuild.
The British company believes the deal will allow it to leverage Western’s reputation to access financing and expand production at its Aberpergwm coal mine in South Wales.
Western’s share value was up 5.6% to $4.70 after the deal was announced.
The company has made a number of announcements over the last several months, including significant management changes and production ramp-ups.
Last week, Western re-opened its Willow Creek coal mine in Northeast B.C., and BIV sat down with Calder to hear his thoughts about the coal business.
“I think the market is going to stay strong for the next 24 months,” Calder said.
The company has moved to quarterly price contracts, which Calder said creates more work but removes some volatility from the pricing.
“Eventually, coal prices will come down. It’s a cyclical market,” he said. “But when the coal prices start to come down we’ll have a more structured reduction in prices.”
Check out next week’s edition of BIV for more information about Western’s growth strategy.