Tuesday, August 5, 2014

"Jeffries on coal M&A"

A correspondent sent in,

"Jefferies LLC, however, in a note released March 25, said it has long been skeptical of mining acquisitions because merging two mining companies typically offers 'very little' in the way of synergies. Jefferies was particularly critical of Alpha Natural Resources Inc.'s acquisition of Massey Energy Co.

'In our opinion, the problem for U.S. coal did not start with the weak natural gas prices of 2012. Rather, we'd argue the problems started with a wave of M&A during the previous year,' Jefferies analyst Peter Ward said. 'In two decades covering the mining industry, these were some of the most regrettable transactions we had ever seen. And, we said so at the time. Sadly, we have seen too much of a desire to get bigger simply for the sake of getting bigger throughout the mining industry.'"

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