Cliffs Natural Resources, Alpha Natural Resources nix merger, settle lawsuit

By Angela McDaniels

Tacoma, Wash., Nov. 17 - Cliffs Natural Resources Inc. and Alpha Natural Resources, Inc. said the boards of directors of their respective companies have agreed to terminate the merger agreement between Cliffs and Alpha and settle litigation brought by Alpha in Delaware Chancery Court.

Each board's decision was made after considering various issues that included the current macroeconomic environment, uncertainty in the steel industry, shareholder dynamics and risks and costs of potential litigation, according to a joint news release.

The boards determined that settlement of the litigation and termination of the merger agreement were in the best interests of its equity holders.

Alpha and Cliffs added that, going forward, the companies plan to work together to find ways to realize synergies in their coal operations.

Under the settlement agreement, the merger will be terminated, Cliffs will pay Alpha $70 million, Alpha will dismiss the Delaware litigation with prejudice and the companies will release each other from all obligations and claims related to the proposed merger.

Cliffs agreed on July 16 to acquire Alpha in a cash-and-stock transaction valued at about $10 billion. Alpha shareholders would have received 0.95 of a share of Cliffs common stock and $22.23 in cash per Alpha share.

As previously reported, Cliffs rescheduled its special meeting of shareholders to Dec. 19, and Alpha filed an action in the Delaware court to require Cliffs to hold the meeting as scheduled on Nov. 21.

The court later approved a stipulation that would have let Cliffs hold the meeting on Dec. 19.

Alpha Natural Resources, located in Abingdon, Va., supplies Appalachian coal to the steel industry, electric utilities and other industries.

Cliffs Natural Resources produces iron ore pellets in North America and supplies metallurgical coal to the steelmaking industry. The company is based in Cleveland.

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