Massey Rises Most in 17 Months After Report It's Seeking a Possible Sale
Massey Energy Co., owner of the Upper Big Branch coal mine where 29 people died in April, rose the most in 17 months on a report it’s seeking a possible sale.
Massey gained as much as 9.7 percent, the most since May 18, 2009, after the Wall Street Journal said the Richmond, Virginia-based company is “exploring strategic alternatives, including a possible sale.” Massey’s board formed a committee last week to look at the future of the company, the newspaper said, citing people familiar with the matter.
“There may be some interest out there and there may be potential suitors around, but I have a hard time seeing the company structuring anything before the completion of the Upper Big Branch accident investigation,” said Daniel Scott, an analyst at Dahlman Rose & Co. in New York.
The company rose $2.30, or 6.5 percent, to $37.86 at 10:46 a.m. on the New York Stock Exchange composite trading. Earlier the shares touched $39.
Massey may seek to be acquired, buy another company or remain independent, the newspaper said.
In a statement today, Massey said its board and management are “always focused on opportunities to create shareholder value,” and it doesn’t “comment on specific opportunities.”
Massey has the largest reserve base in Central Appalachia and the lowest cost production among major producers, according to Jeremy Sussman, an analyst at Brean Murray Carret & Co. in New York.
The company may produce 13 million tons of metallurgical coal in 2011, becoming one of the largest producers of that type of coal, according to Sussman.
“Given all of those positives, we have to think that Massey’s assets would be viewed attractively by potential domestic and international buyers,” Sussman said in a report today.
The company said in July that its reserve of metallurgical coal is estimated at 1.3 billion tons. Metallurgical coal is used to produce steel, while the thermal form of the fuel is consumed by utilities to generate electricity.
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