Arch Coal ACI has agreed to purchase International Coal ICO for $14.60/share, a 32% premium to the $11.03/share ICO close Friday. The combined company will be one of the most diverse in the US. The deal is organized as an all cash tender offer and is expected to close in 2Q11, requiring share sales by the majority of ICO holders. Current ICO holders totaling 17% have agreed to the tender, which will begin mid-May.
Dahlman Rose calculates that the deal would be accretive to ACI shareholders in 2012 assuming two thirds of the transaction price is funded using new debt. Arch Coal has provided a synergy estimate of $70-80MM per year beginning sometime in 2012. A significant amount would come from blending Arch's low-vol B and PCI met products with International's low vol, high-vol A and B products.
Dahlman Rose views the premium as sufficient to ward off most alternative suitors
for ICO and believe the deal will face little difficulty with regulators. Dahlman sees the deal as positive for both parties, giving a good premium to ICO shares and transforming ACI into more of a diversified, met focused company.
Dahlman Rose has a Buy rating on ACI and ICO
ACI closed Monday at $33.53
Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in