Patriot Coal (PCX) Surges As Investors Applaud Magnum Coal Acquisition

Shares of Patriot Coal Corporation (NYSE: PCX) are 16% higher today after the company agreed to acquire Magnum Coal, one of the largest and lowest-cost coal producers in Central Appalachia.

Magnum operates 12 mines and 7 preparation plants and sold 18.4 million tons of coal in 2007 and has over 600 million tons of proven and probable reserves in southern West Virginia.

Under the terms of the agreement, Magnum stockholders will receive approximately 11.9 million shares of newly-issued Patriot Coal common stock. Additionally, Patriot will assume net debt estimated at $150 million, bringing the total acquisition price to approximately $709 million based on the April 2, 2008 closing price of Patriot common stock.

Patriot President and Chief CEO, Richard M. Whiting, said the transaction is expected to provide substantial commercial and operational synergies.

Large Patriot Coal shareholder ArcLight Capital was positive on the transaction. The firm will own approximately 16% of Patriot shares following the closing of the merger. [LJ]

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