Consol and Arch merge to create $5 billion Pennsylvania-based coal company

Arch Resources and Consol Energy are merging to create a single coal producer valued at more than $5 billion, the companies announced Wednesday, the latest consolidation in an energy sector eager for deals.

Arch shareholders will receive 1.326 shares of Consol common stock for each Arch share they own. Consol shareholders will own approximately 55% of the new company — to be called Core Natural Resources — and Arch shareholders will own approximately 45%.

Cole Natural Resources will be headquartered in Canonsburg, Pa., southwest of Pittsburgh, where Consol Energy is currently headquartered. Arch is headquartered in St. Louis.

Consol Energy’s CEO and Chairman of the Board will serve as Executive Chairman of the Company, and Arch’s CEO, Paul Lang, will serve as Chief Executive Officer.

If shareholders and regulators approve the transaction, it is expected to close in the first quarter of 2025.

Arch shares rose 5.9% on Wednesday, while Consol shares rose 7.9%.

Coal consumption in the United States has fallen almost every year since 2005 as power plants have switched to natural gas. The U.S. consumed about 426 million short tons of coal last year. Annual coal consumption in 2005 was more than one billion short tons. That has led to mine closures and job losses throughout the sector.

The surviving coal companies need to cut costs, and that can be achieved both through new technology and mergers like the one announced by Consol and Arch Wednesday.

Arch and Consol said Core Natural Resources is expected to realize $110 million to $140 million per year in cost and operational synergies within 18 months of closing.

Arch’s revenue for 2023 was $3.1 billion, while Consol earned $2.5 billion in the same year.

“Our assets are highly complementary, resulting in increased diversification across coal types, end uses and geographies,” Consol Energy’s Brock said.

There has been an increase in takeovers of large energy companies this year, although most of it has been in the oil and gas sector.

The oil and gas sector boomed after Russia invaded Ukraine in 2022, and while oil prices have fallen, there has been a surge in mergers between cash-rich energy companies in recent years.

In May, ConocoPhillips announced it was buying Marathon Oil in an all-stock deal valued at about $17.1 billion. That came just weeks after Exxon completed its $60 billion acquisition of Pioneer Natural Resources. Last July, Exxon announced it would pay $4.9 billion for oil and gas producer Denbury Resources.

Chevron’s proposed $53 billion acquisition of Hess is still awaiting regulatory review.