Shares of Massey Energy jumped more than 8 percent in premarket trading Tuesday after published reports suggested the coal company is exploring a possible sale.
The Wall Street Journal reported that Massey, based in Richmond, Va., has formed a committee to study a number of options. Those options could include a sale to a rival or a private-equity firm, acquiring another company or remaining independent.
The Journal's sources said Massey's board is pushing for the review while the company's CEO Don Blankenship wants to keep the company independent. The paper said the committee could reach a decision by mid-November.
An explosion at one of Massey's mines in West Virginia killed 29 miners, making it the worst U.S. coal mining accident in 40 years.
In a note to clients, FBR Capital Markets analyst David M. Khani said he believes there is a good chance the company could be bought out. He believes Massey, with its rich coal assets in Appalachia, could fetch $50 per share in a buyout.
The shares were trading at close to $55 just before the mine explosion. By mid-July, they'd dropped by more than half. After a recent run-up, shares closed Monday at $35.56. In premarket activity, the shares rose to $38.60, up 8.5 percent.
Khani doesn't think the company will be taken private because it would need to sell assets to reduce its debt. . .