Alpha Natural Resources, one of the biggest firms in the Appalachian coal business, is close to a deal to buy Massey Energy Company for about $7 billion, sources said.

Massey shareholders will receive slightly more than one Alpha share for each Massey share in addition to $10 per share in cash, for a value of $68 a share, said a source familiar with the deal.

That represents a nearly 19 per cent premium over Massey's closing share price of $57.23 on Friday.

The sources said the deal would be about $7 billion to combine two of the biggest companies in the Appalachian coal business.

Massey has said it was weighing strategic options, sparking market speculation that one of its peers may buy it. ArcelorMittal, the world's largest steelmaker, and St.
Louis-based Arch Coal Inc had been seen as potential bidders for Massey.

The Wall Street Journal first reported that Abingdon, Virginia based Alpha and Massey were close to a deal. It said talks were continuing and a deal could be signed on Friday night.

Massey, based in Richmond, Virginia, has been under scrutiny by federal mine safety regulators since an explosion on April 5 last year in one of its West Virginia mines that killed 29 workers, the deadliest US coal mining disaster in 40 years.-Reuters