Massey Energy workers
Massey Energy workers take a break from drilling efforts in Montcoal. Reuters

Shares of Massey Energy Co. (NYSE: MEE) are rallying this morning after it was announced over the weekend that Alpha Natural Resources Inc. (NYSE:ANR) agreed to buy the metallurgical coal producer in a cash-and-stock deal valued at $8.5 billion.

MEE shares have soared 11.17 percent as of 10:14 a.m. (New York time).

Under the terms of the agreement, Massey stockholders will receive 1.025 shares of Alpha stock and $10 in cash, for a total consideration of $69.33 as of Friday’s market close, for each common share of Massey common stock held.

However, Kendall Law Group, led by former federal judge Joe Kendall, said it is investigating Massey on behalf of shareholders in connection with the Alpha proposed acquisition.

Kendall will seek to determine if Massey and its board breached their fiduciary duties by entering into the agreement without properly shopping for a deal that would provide better value for shareholders.

Kendall cited a recent New York Times report which noted that “Massey was seen as an attractive acquisition because it has the largest reserves of metallurgical coal of any United States mining company,” and that the “company has identified exports to countries like India and Brazil, where strong demand has driven up global prices for the product, as key components of its future growth.”

Due to these factors, Kendall said, it believes the transaction may be undervaluing the company.