CONSOL Energy, Arch Resources enter all-stock merger deal to create global coal producer

Pennsylvania’s CONSOL Energy Inc. has entered into a definitive agreement with Arch Resources Inc. to combine in an all-stock merger of equals to create a diversified coal producer serving global steel, industrial, and power generation customers.

The new company, Core Natural Resources, will produce and export high-quality, low-cost coals with offerings ranging from metallurgical to high calorific value thermal coals.

“We are excited to bring our companies together to create a new industry leader that is ideally positioned to meet the rising demand for critical resources and energy around the world,” said CONSOL Chairman and CEO Jimmy Brock. “Our assets are highly complementary, resulting in increased diversification across coal types, end uses, and geographies.”

Brock added that Core Natural Resources is expected to have a strong balance sheet, ample liquidity, and robust free cash flow to deliver industry-leading capital returns.

“We look forward to working closely together to continue meeting the world’s steel, infrastructure, and energy needs that are so critical to our everyday lives and to capture the significant benefits and long-term value we believe this merger will create for our stockholders, employees, customers, and the communities in which we live and operate,” he said on Wednesday.

With mining operations and terminal facilities across six states, the combined company will own 11 mines, including one of the largest thermal coal mining complexes in North America, as well as one of the largest metallurgical coal mine portfolios in the United States.

In addition, Core Natural Resources will have access to global markets via ownership interests in two export terminals on the U.S. Eastern seaboard, along with strategic connectivity to ports on the West Coast and Gulf of Mexico, according to Arch Resources, which produces metallurgical products for the global steel industry.

CONSOL Energy, a Canonsburg, Pa.-based producer and exporter of high-Btu bituminous thermal coal and metallurgical coal, owns and operates some of the most productive longwall mining operations in the Northern Appalachian Basin.

Together, the companies sold an aggregate of approximately 101 million tons of coal in 2023 to steelmaking, industrial, and power-generation customers. Pro forma, Core Natural Resources would have a market capitalization of approximately $5.2 billion as of Aug. 19, and on a pro forma basis for 2023, revenues were approximately $5.7 billion, and adjusted EBITDA was approximately $1.8 billion, excluding expected synergies, according to the companies’ joint statement.

“This merger will join two proven leadership teams and best-in-sector operating platforms to establish a premier North American coal producer with worldwide reach and world-class mining and logistics capabilities,” said Paul Lang, CEO of Arch.

Core Natural Resources will enjoy the benefits of CONSOL’s growing seaborne thermal business focused on industrial applications, coupled with Arch’s significant exposure to attractive global metallurgical coal markets, he said.

“Together, we expect to realize meaningful operating synergies through the optimization of support functions, greatly enhanced marketing opportunities, and a significantly expanded logistics network, which will enhance our ability to deliver coal reliably and efficiently to our global customers,” Lang said.

Importantly, he added, both companies are driven by a commitment to safety, environmental and social stewardship, and operating excellence.

“We will continue to build around these commitments as we work to deliver superior value to stockholders,” said Lang.

The transaction is expected to be accretive to free cash flow for both Arch and CONSOL in the first full year following the close of the transaction and is expected to generate $110 million to $140 million of annual cost and operational synergies within six to 18 months following the close, the companies said.

Under the terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies, Arch stockholders will receive a fixed exchange ratio of 1.326 shares of CONSOL common stock for each share of Arch common stock owned.

Upon closing, Core Natural Resources will trade under a new ticker. Arch stockholders will own approximately 45 percent of Core Natural Resources, and CONSOL stockholders will own roughly 55 percent on a fully diluted basis.

The merger is expected to close by the end of the first quarter of 2025, subject to approval by both companies’ stockholders, regulatory approvals, and other customary closing conditions.

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