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%.
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