Coal producer Patriot Coal Corp. said Wednesday it agreed to buy Magnum Coal Co. for about $559 million.
Under the terms of the deal, Magnum shareholders will get about 11.9 million shares of newly issued Patriot common stock. Patriot will also assume debt estimated at $150 million. Including the debt, Patriot estimated the deal was worth $709 million.
Magnum operates 12 mines and seven preparation plants in Central Appalachia.
With the addition of Magnum, Patriot said it will be the seventh largest coal producer in the U.S.
Patriot said it has bridge financing in place and should have permanent financing arranged by the time the deal closes. Patriot said it expects to complete the acquisition around midyear.
Once the deal closes, ArcLight Capital Partners LLC, the majority stockholder of Magnum, will own about 16 percent of Patriot shares and Magnum's other shareholders will own a combined 15 percent interest.
The deal still needs approval from Patriot shareholders.
Patriot shares fell 76 cents to close at $46.95.
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