News of an acquisition of one coal company by another could be having a positive impact on the coal exchange traded fund (ETF).
Patriot Coal (PCX) announced its plans on Wednesday to acquire its rival, Magnum Coal, for $709 million, reports Christopher Barker for the Motley Fool. Patriot is a holding of Market Vectors Coal (KOL) and is 1.1% of the assets. The company was created as a spinoff of Peabody Energy (BTU), which is 7.2% of KOL.
With this acquisition, Patriot will pick up 12 coal mines and seven preparation plants and gain leverage to negotiate some lower transportation costs. It also makes them the second-largest coal producer in the United States, led by Arch Coal (ACI), which is 5.3% of KOL.
The fund is up 4.8% in midday trading, and since its Jan. 15 launch, it’s down 2.4%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.