Murray Energy acquires 50 percent stake in Foresight Energy

Murray Energy has agreed to acquire control of Foresight Energy for $1.4 billion. The 50 percent acquisition will add output in the Midwest and create one of the country’s largest suppliers of coal.

Although Foresight founder and majority shareholder Christopher Cline will see his stake shrink, he will remain a significant investor and stay on as a director, Bloomberg News reported.

The deal will give Murray Energy a bigger presence in the Illinois basin, a coal-mining region that’s a rare bright spot in an otherwise beleaguered and shrinking industry. The combination will create a producer with more than 9 billion tons of coal reserves. That’s more than any other U.S. supplier, according to data compiled by Bloomberg.

“In this extremely distressed coal marketplace, a coal-mining company must strive to be the lowest-cost producer in any sourcing region,” Murray said in the statement. “Foresight Energy has continued to be the low-cost producer in the Illinois basin, with a focus on safely producing high-quality, high-heat coal, strategically located near low-cost transportation.”

Murray, 75, is a fourth-generation miner who founded his St. Clairsville, Ohio company in 1988. He is perhaps the most outspoken defender of the U.S. coal industry, which is stuck in its worst downturn in decades. The fuel his company sells to power plants is under pressure from cheap natural gas and tougher emissions standards.

Murray has predicted on several occasions that at least five big U.S. coal producers will have to file for bankruptcy. He regularly blasts President Barack Obama’s administration for actions he views as anti-coal, and he asserts that there’s no reason to believe that coal prices will rebound soon.

That hasn’t deterred Murray from making deals to expand his company. He acquired the West Virginia coal operations of Consol Energy Inc. in December 2013 for $3.25 billion. He has since said he plans to increase production at those mines, and he has been on the lookout for more acquisitions.