Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes—just in case they’re material to our investing thesis.

What: Shares of coal miner Massey Energy (NYSE: MEE) surged as high as 12% in early Monday trading after rival Alpha Natural Resources (NYSE: ANR) agreed to buy it in a deal worth about $7.1 billion.

So what: The acquisition, which would create the world's third-largest metallurgical coal company, values Massey shares around $69.33 per share, representing a 21% premium to Friday's closing price. Massey's profitability has dropped sharply since its high-profile April coal mine tragedy, but the 1.2 billion tons of metallurgical coal reserves it still boasts has many analysts applauding the deal.

Now what: For those of us who missed out on Massey, the sector should continue to see a wave of consolidation. With big coal miners rushing to keep up with voracious Chinese and Indian demand, small-cap players like International Coal and Patriot Coal seem like particularly tasty takeover targets going forward. Fools know never to buy stock based purely on a buyout possibility, but if the valuation is reasonable, it might just be a bet worth taking.

Interested in more info on Massey? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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