The company responsible for the Upper Big Branch disaster is about to pay a very high price for its cavalier attitude toward safety--it's about to lose its independence. Earlier today, Massey Energy agreed to merge with Alpha Natural Resources in a $7.1 billion deal.
The deal will unite two of the biggest American producers of coal, and would bolster Alpha’s presence in the burgeoning market for metallurgical coal, an increasingly valuable component of steel.
But it will also likely help Massey move past its legal woes, arising from safety violations like the Upper Big Branch mine explosion last year that killed 29 people. Alpha’s safety record is cleaner than Massey’s, and new owners could help the company reach settlements for several outstanding lawsuits and regulatory inquiries.
I'd have preferred to see Massey go out of business entirely. But at the very least, it looks like a new owner will force Massey to clean up its act in the wake of what at the very least is manslaughter at Upper Big Branch.
If Dealbook is to be believed, it was pretty much inevitable that Massey was going down. The company has taken a well-deserved financial beating since last April's explosion--it lost $72.2 million last year. Massey concluded as early as November that it could not stay independent.
Apparently the main obstacle to a merger was longtime Massey CEO Don Blankenship. Seems his retirement announcement came only a few weeks after the board decided it wanted to talk with Alpha.