Massey Shareholders: “Just Say No”

by Todd Shriber

The hits just keep on coming for Massey Energy (MEE), the largest coal miner in Central Appalachia, as a group of shareholders are looking to block Alpha Natural Resources’ (ANR) $7.1 billion takeover of the company.

Massey has certainly had an event-filled 14 months.

Now, some Massey investors have asked the West Virginia Supreme Court of Appeals to halt the deal. They allege that Massey’s management team agreed to the sale to skirt personal liability for the April 2010 blast at the company’s Upper Big Branch mine in West Virginia that killed 29 workers, according to The Wall Street Journal. The Upper Big Branch tragedy was the worst accident at a U.S. coal mine in almost four decades.

As if facing a lawsuit in West Virginia isn’t bad enough, the company is also contending with a separate suit brought by the New Jersey Building Laborers Pension Fund, which also seeks to halt the sale, the Journal reported. A Delaware judge hearing the case declined to rule on the request last week, according to Bloomberg.

While that may amount to a small, Pyrrhic victory for Massey, the timing of having to deal with these lawsuits is less than optimal for the company. Its shareholders were scheduled to approve the Alpha Natural takeover Wednesday, June 1.

For its part, Alpha Natural has motivation to get this deal done. As Bloomberg notes, the combined company would be the largest U.S. producer of metallurgical coal. That’s the variety that’s in high demand by Asian steel producers.

As for Massey, it’s purely speculation that the company wanted to speed up a sale so its executives could avoid legal trouble. At the same time, it just wouldn’t be typical Massey if there wasn’t some controversy involved.

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