Arch Resources, Consol Energy to combine in all-stock merger

Arch Resources (NYSE:ARCH) and Consol Energy (NYSE:CEIX) announced an agreement Wednesday to combine in an all-stock "merger of equals" to create Core Natural Resources.

Under the deal terms, Arch (ARCH) stockholders will receive a fixed exchange ratio of 1.326 shares of Consol (CEIX) common stock for each share of Arch common stock owned.

"With mining operations and terminal facilities across six states, the combined company will own 11 mines, including one of the largest, lowest cost, and highest calorific value thermal coal mining complexes in North America and one of the largest, lowest cost, and highest quality metallurgical coal mine portfolios in the U.S.," the companies said.

Arch (ARCH) and Consol (CEIX) sold ~101M tons of coal combined in 2023 to steelmaking, industrial and power generation customers; pro forma, Core Natural Resources would have a ~$5.2B market capitalization as of August 19, 2024.

On a pro forma basis, excluding the impact of synergies, Core Natural Resources would have generated ~$1.4B of free cash flow.

The companies said they expect to generate $110M-$140M of annual cost and operational synergies within 6-18 months following the close of the transaction.

Consol (CEIX) Chairman and CEO Jimmy Brock will become Executive Chairman of Core Natural Resources' board of directors, Arch (ARCH) CEO Paul Lang will serve as CEO of Core Natural and take a seat on the board, and Consol President and CFO Mitesh Thakkar will serve as President and CFO of the combined company.