During February, Peabody and Arch Coal announced that they intend to continue to pursue the creation of a joint venture that will “strengthen coal’s competitiveness with other energy sources and create substantial value for multiple stakeholders.” The announcement follows a negative split decision by the U.S. Federal Trade Commission (FTC) that advances the process to the legal system.
“We have provided tremendous amounts of evidence to the FTC during an extensive review, fully demonstrating that coal, including Southern Powder River Basin (PRB) coal, faces intense competition from natural gas and other alternate fuels,” Peabody President and CEO Glenn Kellow said. “We believe that the commission has reached an incorrect decision that should be rapidly remedied within the court system to allow customers and others to benefit from the combination.”
The companies said they intend to appeal the FTC’s decision within the U.S. federal court system over the coming months. They believe the FTC has incorrectly defined the market, and fails to reflect the true competitive nature of the current U.S. energy landscape.
The transaction was announced in June 2019 and would combine the companies’ PRB and Colorado assets. Ownership of the joint venture would be structured with Peabody owning 66.5% and Arch owning 33.5%. The joint venture is expected to realize annual synergies of $120 million over an initial 10-year period.
The transaction would combine Peabody’s North Antelope Rochelle Mine (NARM) and Arch’s Black Thunder Mine, which share a property line of more than seven miles. Additional assets include the Caballo, Rawhide and Coal Creek mines in Wyoming along with the West Elk and Twentymile mines in Colorado.
