Coal producers Arch Resources and CONSOL Energy Inc. announced Wednesday a $2.8 billion merger of equals to create Core Natural Resources.
The newly created company will combine mining operations across six states producing metallurgic and high calorific value thermal coals for global export.
On a pro forma basis, Core Natural Resources would have a market capitalization of approximately $5.2 billion. The companies had combined revenues, again on a pro forma basis, of $5.7 billion for 2023 and adjusted EBITDA of $1.8 billion.
Under the terms of the agreement Arch stockholders will receive a fixed exchange ratio of 1.326 shares of CONSOL common stock for each share of Arch common stock owned. Upon closing, Core Natural Resources will trade under a new ticker. Arch stockholders will own approximately 45% of Core Natural Resources, and CONSOL stockholders will own approximately 55% on a fully diluted basis. The merger is expected to be tax-free to stockholders of both companies for U.S. federal income tax purposes.
Jimmy Brock, chair and CEO of Pennsylvania-based CONSOL, said, “We are excited to bring our companies together to create a new industry leader that is ideally positioned to meet the rising demand for critical resources and energy around the world. Our assets are highly complementary, resulting in increased diversification across coal types, end uses, and geographies.”
Paul Lang, CEO of St. Louis-headquartered Arch, said, “Core Natural Resources will enjoy the benefits of CONSOL’s growing seaborne thermal business focused on industrial applications coupled with Arch’s significant exposure to attractive global metallurgical coal markets.”
Brock will serve as executive chairman of the newly created company, and Lang will become its CEO. Core’s headquarters will be in Canonsburg, Penn., but will maintain an operational presence in St. Louis.
Perella Weinberg Partners is serving as exclusive financial advisor to Arch, with Latham & Watkins and Gibson, Dunn & Crutcher serving as outside legal counsel. Moelis & Company is exclusive financial advisor to CONSOL, and Wachtell, Lipton, Rosen & Katz and McGuireWoods are advising as outside legal counsel.
The Latham & Watkins advising Arch Resources was led from New York by partner Charles Ruck and New York/Houston partner Charles Carpenter. The corporate team includes New York partner Ian Nussbaum and Houston counsel Thomas Verity, with associates Maddy Berg, Justin Reinking, Brian Herskowitz and Armaan Bhimani. Advice was also provide on bankruptcy matters by New York counsel Hugh Murtagh; on public company representation matters by Washington, D.C. partner Julia Thompson, Washington, D.C./Austin partner Sarah Fortt and Washington, D.C. counsel Jonathan Drory, with associate Kate Wang; on litigation matters by Chicago partner Robin Hulshizer and Bay Area partner Nicole Valco, with associate James Friedland; on tax matters by Houston partners Jim Cole and Jared Grimley, with associate Dominick Constantino; on finance matters by Chicago partner Cindy Caillavet Sinclair and Chicago counsel Andrea Keller, with associate Michael Harris; on executive compensation, employment and benefits matters by Washington, D.C. partner David Della Rocca and Houston counsel Krisa Benskin, with associate Christina Schrantz; on environmental matters by Washington, D.C. partner James Barrett; on real estate matters by New York counsel Shira Bressler; and on intellectual property matters by New York partners Steven Betensky and Jessica Cohen.