Citi Reports Arch Coal To Acquire ICO

According to Citi, Arch Coal ACI announced that it has reached an agreement to acquire the outstanding shares of thermal and met coal miner International Coal Group (ICO) for $14.60/sh cash for a transaction value of $3.4 billion. Citi said that ACI plans to commence a tender offer for ICO's shares in mid May with the deal expected to close by the end of 2Q. “Since ACI has minimal cash on hand, the company plans to raise debt and equity but stressed that this deal will be mostly debt financed while maintaining its current credit rating. Estimated annual synergies of $70-80 million are based on blending opportunities as well as purchasing and administrative savings.” Arch Coal closed yesterday at $33.53.