Massey shares rise on Blankenship news
CHARLESTON, W.Va. - Investors cheered the abrupt retirement of Massey Energy Co.'s chief executive Monday.
Massey's shares outpaced most major U.S. coal stocks, before backing off to close up $1.21, or 2.4 percent, at $51.63.
The troubled Richmond, Va.-based coal company announced Friday that longtime chief Don Blankenship intends to retire Dec. 31, giving investors a full weekend to ponder the news.
"It may increase the chances that Massey could be merged or acquired," said Michael Dudas, an analyst with Jefferies & Company. "Now they're moving on with an acquisition. The stock has reacted very favorably."
Massey announced last month that it was reviewing options for increasing shareholder value. Typically, that's interpreted as an effort to sell a company, but Blankenship was considered by some an impediment to striking a deal.
Former director Daniel Loeb, founder of New York hedge fund Third Point, claimed in his letter of resignation in 2007 that Massey's board declined a proposed merger because the deal would have required Blankenship to leave.
Sen. Joe Manchin said he hopes Massey finds a U.S. buyer that will help retain jobs in West Virginia.
"Massey has an awful lot of good, quality workers throughout the state, and I hope they're able to continue their employment. So, we're kind of watching and monitoring that. I'm understanding that there are quite a few companies that are looking at it," Manchin said. "I've been very hopeful that one of our domestic companies are able to continue that, or become involved in that process."
The turnover comes as Massey struggles to recover from the April 5 explosion that killed 29 miners at its Upper Big Branch mine some 50 miles south of Charleston. The blast was the deadliest in the U.S. coal industry since 1970, and is the subject of criminal and civil investigations.
Massey and Blankenship have not responded to requests for an interview. However, he told television station WCHS that he just thought it was time to retire and he's not worried about the Upper Big Branch investigation.
"I pretty well think I know what happened and what the outcome will be, so I'm not concerned anymore about the investigation. I think it's pretty much behind us," he said.
Government investigators have not completed their investigation, but have discounted Blankenship's theory that the explosion was caused by a massive influx of natural gas that overwhelmed required safety equipment.
Richmond, Va.-based Massey has struggled with two money-losing quarters since the explosion, which prompted a regulatory crackdown that the company blames for cutting production.
Massey's board named Baxter F. Phillips Jr. to replace Blankenship as chief executive. Phillips has been with Massey since 1981 and was promoted to president in November 2008.
Blankenship maintained a high profile, engaging in public spats with the likes of Robert F. Kennedy Jr. over global warming, lavishing millions on conservative political candidates in West Virginia, and accusing the head of the federal Mine Safety and Health Administration of lying to Congress, among other things.
Phillips operates largely out of the public's eye. Since his promotion, Phillips has regularly spoken to securities analysts during quarterly conference calls. He's also overseen efforts to integrate the operations of Cumberland Resources, a coal company Massey bought for $960 million this year.
"Maybe the industry and regulators may deal with Massey and its constituents in a better, more realistic light. That's my impression of what the market is saying," Dudas said.
MSHA has not said anything about Blankenship's departure, but on Monday a spokeswoman said the agency has given Massey more time to fix a citation for allegedly impeding the explosion investigation.
Massey was allowed to send three investigative teams into the Raleigh County mine Friday and Saturday and again Monday, MSHA spokeswoman Amy Louviere said.