Walter Energy (NYSE:WLT) Receives Mixed Reaction from Western Coal (TSE:WTN) Bid

Even though Walter Energy (NYSE:WLT) shares soared Friday, there is still mixed reaction to their bid for Western Coal (TSE:WTN), and has also generated the idea they themselves may be a takeover target.

FBR said, "Shareholders woke up yesterday (Thursday) and had a mixed reaction to WLT's merger opportunity with WTN, for several reasons: (1) expectations, which some still have, of a WLT sale, not a defensive move (we do not); (2) limited understanding of WTN, or having preconceived notions, based on the past; (3) the large premium paid; and (4) the unknown financing structure...WLT is now "half-pregnant," since it now owns, or is responsible for, 20% of WTN shares and has two weeks to come to terms with Western Coal's board...We are increasing our WLT 2010/2011 EPS estimates to $7.73/$8.39 from $7.64/$7.96, primarily to reflect the income contribution (based on consensus) from the initial 9.2% stake in WTN, which WLT is acquiring from Audley Capital."

Walter Energy closed Friday at $105.91, soaring $9.05, or 9.34 percent. FBR has a price target of $98 on Walter, and maintains their "Outperform" rating on them.