UPDATE 2-Walter Energy seals $3.3 bln Western Coal buy

* Pays C$3.3 bln to create world’s leading met coal producer

* C$11.50 a share acquisition price is 56 pct premium

* Purchase comes amid rising demand for metallurgical coal

* Enlarged firm expects to produce over 20mt of coal by 2012

(Adds details)

By Julie Crust

LONDON, Dec 3 (BestGrowthStock) – U.S.-based mining group Walter
Energy Inc (WLT.N: ) is to buy Canada’s Western Coal (WTN.TO: )
(WTN.L: ) for C$3.3 billion ($3.3 billion) to create the world’s
leading producer of metallurgical coal used by steelmakers.

The deal shows how surging global steel production, driven
mainly by China, is stimulating M&A activity in the mining
sector, with coal producers scrambling to take advantage of
booming Asian demand.

Walter Energy will pay C$11.50 a share, a 56 percent premium
to Western Coal’s closing price on Nov. 17, the day before
Walter Energy announced its proposal. [ID:nSGE6AH0BN]

“This is a transformative transaction at a time when global
demand for metallurgical coal is surging,” said Joe Leonard,
interim Chief Executive of Walter Energy.

The enlarged company will have total coal reserves of about
385 million tons and expects to produce more than 20 million
tons of coal by 2012.

Under the deal, Western Coal shareholders will get about
C$2.1 billion in cash and own about 14 percent of the enlarged

The transaction is expected to boost Walter Energy’s
earnings per share in the first full year after completion which
is expected by the second quarter of 2011.

Walter Energy had said on Nov. 18 that it was in talks to
buy its Canadian peer and on Thursday extended the 14-day period
for exclusive talks.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ FACTBOX on coal's role steel production [ID:nSGE6270A7] BREAKINGVIEWS on coal industry [ID:nN18111574] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Steelmaking, or metallurgical, coal is a key ingredient used
in about 70 percent of worldwide steel production and with steel
demand forecast to hit a record 1.34 billion tonnes in 2011.

“Our combined production capacity and geographic footprint
leaves us extremely well positioned to benefit from favorable
sector dynamics driven by increased steel production in markets
such as China, India and Brazil,” said Leonard.

Shares in London-listed Western Coal were up 7.2 percent at
0933 GMT, outperforming a 0.1 percent climb in a British mining
index (.FTNMX1770: )

(Editing by Matt Scuffham and Jane Merriman)

UPDATE 2-Walter Energy seals $3.3 bln Western Coal buy