Massey Energy Co., owner of the West Virginia mine where 29 people died in April, surged after it said Chief Executive Officer Don Blankenship will retire at the end of this month.
Massey jumped $1.73, or 3.4 percent, to $52.15 at 10:08 a.m. in New York Stock Exchange composite trading. The shares have risen 24 percent this year.
Blankenship, 60, has worked at Massey for 28 years and served as chairman and chief executive officer since Nov. 30, 2000, the Richmond, Virginia-based company said. He will be succeeded by Baxter F. Phillips Jr. Last month, Massey said its board of directors ordered a review of strategic alternatives, a process that may lead to a sale.
“We believe MEE will be taken out,” David Khani and Mitesh Thakkar, analysts at FBR Capital Inc. in Arlington, Virginia, wrote in a report today. "CEO Don Blankenship stepping down should accelerate this action."
Acquisition inquiries began earlier this year after the April 5 accident at the Upper Big Branch mine near Montcoal, West Virginia. The mishap was the worst U.S. coal mining disaster in 40 years.
Blankenship, who began his career with the company as an office manager in 1982, has expressed reservations about the company’s potential sale. Last month, he said merger and acquisition options would be “fully vetted” when the board met at the Greenbrier Resort in White Sulphur Springs, West Virginia, Nov. 21.
“Don’s departure increases the likelihood that something will get done,” said Brian Gamble, an analyst at Simmons & Co. International Ltd. in Houston. “I’m still of the opinion that Massey will be acquired rather than being the acquirer.”
Massey, a company that’s been operating for 94 years, is the largest coal producer in Central Appalachia with 2.8 billion tons of reserves, 1.3 billion of which are metallurgical coal, used to produce steel.
BHP Billiton Ltd. is seeking an 8 percent increase in coking coal prices to $225 a ton for the next quarter in talks with Japanese steelmakers, according to a report in Nikkei newspaper. The contract is regarded as the industry’s benchmark.
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