Buyer Beware: Massey Energy Goes Rogue, and Its New Owner Eats Crow
Massey Energy won't allow a minor detail like merging with another company keep it from blaming God for a coal-mine explosion that killed 29 of its workers last year. On the contrary, Massey is hell bent on being heard even if it means blindsiding its new owner, Alpha Natural Resources (ANR). The loser in all of this is Alpha, a coal-producing powerhouse now reduced to rookie status for its inability to control the predictably capricious Massey.
Just two days after Massey sold itself to Alpha for $7.1 billion, the company delivered a nasty little sucker punch -- or was it a parting gift? -- with the release of an internal report that argued the Upper Big Branch Mine disaster was an act of God, and in no way a consequence of its horrible safety practices. The report wasn't leaked by a rogue employee. It was issued by none other than former Massey Chairman Bobby R. Inman, who wrote in a cover letter that he honored a request from Alpha to delay its release to "minimize any publicity."
Alpha tells a different story. Not long after Massey's internal report was released, Alpha said it didn't authorize the release of the report and wasn't given the opportunity to review it.
In Alpha's view, a view it had expressed to Massey prior to the consummation of their merger, it was not appropriate to release any report purporting to contain Massey's assessment of the cause of the Upper Big Branch explosion before Alpha had an opportunity to fully understand and assess the situation.It doesn't much matter whether Alpha is trying to save face or was a just an unsuspecting victim. Either way, it comes off as an inexperienced and woefully unprepared parent who's unable to rein in an unruly child.
Bad for Alpha -- but par for the course for Massey
Massey, of course, looks ridiculous -- though that's nothing new, given the company's previous antics. Just last month, J. Davitt McAteer and his independent team of investigators declared Massey could have prevented the worst mining accident in 40 years, but instead knowingly broke the law and disregarded safety practices to produce more coal and boost its bottom line.
At this point, Massey is a lost cause. The lesson here is for Alpha. Obviously, Massey's management and board can't be trusted. More importantly, Alpha should assume the worst: the cancer is deep and widespread. That's bad news for a company that has tried to paint itself as the white knight here.
Alpha has to assume that scrutiny from federal mining regulators and shareholders will be considerably more intense, regardless of its "Running Right" safety campaign or safety pledges from CEO Kevin Crutchfield.
Photo from Flickr user Jan Tik , CC 2.0
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