Massey Energy (MEE) Plans 8.5M Share Offering

What fortunate timing; the day I purchase Massey Energy (MEE) the company decides to do a 8.5M share offering after the close.  Now, as I have mentioned I am seeing some strange things of late where companies who are doing share offerings actually are seeing their stocks jump during the day of the dilution - but that is atypical and I am not understanding the behavior of the market in respect to those companies.  Massey has 85M shares outstanding so this would be a 10% dilution (assuming the overallotment is not fulfilled, which I bet it will be); that said the company is offsetting the dilution with promises to convert much of Cumberland Resources thermal coal production to higher priced metallurgical coal so that benefit has to be paid in some way.  [Mar 17, 2010: Massey Energy Seeks to Double Metallurgical Coal Production with Purchase of Cumberland Resources]  After a nice bounce yesterday, we'll see what sort of pressure is brought to bear on the stock.

• Massey Energy Company (MEEs) announced today that it intends to offer, subject to market and other conditions, 8.5 million shares of common stock in a registered underwritten public offering. In connection with the offering, Massey intends to grant the underwriters an option for 30 days to purchase up to an additional 1.275 million shares of common stock to cover overallotments, if any.
• Massey intends to use the proceeds of the offering to fund a portion of the cash consideration payable in connection with its recently announced $960 million combined cash and stock acquisition of Cumberland Resources Corporation and certain affiliated companies. The consummation of the common stock offering is not contingent on the closing of the acquisition.
• Terms of the Cumberland deal call for Massey to pay $640 million in cash and $320 million in stock. Massey ended 2009 with $665.8 million in cash.

Long Massey Energy in fund; no personal position