UPDATE: Whitehaven Coal To Buy Aston, Boardwalk In A$3 Billion Deal

Whitehaven Coal Ltd. (WHC.AU) said Monday it has agreed the terms of a nearly A$3 billion (US$3.1 billion) deal to acquire fellow mid-tier Australian coal miner Aston Resources Ltd. (AZT.AU) and a coal prospector, greatly increasing its scale to meet booming demand from Asia.

The deal is expected to create a A$5.1 billion company -- the largest strictly coal producer listed in Australia -- that plans to ramp up production to 25 million metric tons a year from a forecast 6 million tons in 2012, the companies said in a statement.

There have been a string of tie-ups in the coal sector in recent years, with U.S. producer Peabody Energy Corp. (BTU) last month acquiring Australia's Macarthur Coal Ltd. for A$4.9 billion.

Whitehaven said it has offered 1.89 of its shares for each Aston share, giving its offer a current value of A$11 per Aston share, or a 13% premium to its closing price Friday. Whitehaven will also buy Boardwalk Resources, which is partly owned by Aston's founder and Chairman Nathan Tinkler, for 85.88 million Whitehaven shares and a further 34 million shares if Boardwalk secures mining leases on two projects.

"The merged entity becomes one of Australia's leading independent coal producers with a high quality portfolio of producing mines, major development projects and attractive exploration assets," said John Conde, chairman of Whitehaven.

The move by Whitehaven follows a failed attempt earlier in the year to sell itself despite attracting suitors from China and India.

Aston's key asset is the Maules Creek coal development project, which it bought from Rio Tinto PLC (RIO) last year, and which is located near Whitehaven mines in New South Wales state.

The deal, billed by the companies as a merger of equals, has the unanimous support of both Aston's and Whitehaven's boards.

"I believe the merged entity will represent an extremely attractive investment of scale in the rapidly consolidating Australian listed coal sector," Tinkler said.

-By Robb M. Stewart and Ross Kelly, Dow Jones Newswires; [phone]; [e-mail] [e-mail]