July 17, 2008
Cleveland-Cliffs Makes Deal for Coal Giant Alpha
By Dee DePass, Star Tribune, Minneapolis
Jul. 17--Iron ore giant Cleveland-Cliffs Inc., which has extensive taconite holdings on Minnesota's Iron Range, sought to expand its mining empire Wednesday with an agreement to acquire Appalachian coal giant Alpha Natural Resources for $10 billion.The stock-and-cash transaction will create one of the largest mining operations in the country and bring coal and iron ore -- key ingredients for making steel -- under one U.S. company. The combined entity will be called Cliffs Natural Resources, and will boast combined revenue of $6.5 billion and $1.9 billion in earnings.
The deal is the latest in a string of moves designed to shore up Cleveland-Cliffs' North American coal and mining operations amid soaring global demand for steel and iron.
Under the terms of the agreement, Alpha stockholders will receive 0.95 shares of Cleveland-Cliffs stock plus $22.23 in cash for each Alpha share they hold. Based on Cleveland-Cliffs' closing stock price Monday, Alpha stockholders would receive $121.05 per share, which amounts to a 27.5 percent premium over Alpha's closing price Tuesday.
Cleveland-Cliffs stock fell $7.44 Wednesday, or 6.7 percent, to 104.02 per share. Shares of Abingdon, Va.-based Alpha Natural rose $10.01, or 10.5 percent, to $104.93.
Dee DePass --612-673-7725
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