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Alpha Natural to acquire Foundation Coal

Alpha Natural Resources and Foundation Coal Holdings have signed a definitive agreement under which the two companies will merge in an all-stock transaction. The combined company will be the third-largest coal producer in the USA, with 2008 revenues of $4.2bn. Alpha and Foundation together operate 59 coal mines and 14 preparation plants and in combination will have reserves of more than 2.3 Gt of coal. Alpha is a leading Eastern coal producer and the nation's largest supplier of metallurgical coal to the steel industry, operating 50 mines and 10 coal preparation plants in four states. Foundation is a diversified producer of thermal coal used by electric utilities, with 9 active mines, 4 preparation plants and coal reserves in Northern Appalachia, the Powder River Basin and Central Appalachia as well as reserves in the Illinois Basin. The operation will enlarge Alpha Natural's activities in both geographical terms and types of coal produced.

The foundation stockholders would own approximately 41% while Alpha stockholders would own approximately 59% of the new company on a fully dilated basis.