Cliffs Natural Resources Inc. and Alpha Natural Resources, Inc. announced that the boards of directors of both companies have approved settlement of litigation brought by Alpha in Delaware Chancery Court and termination of the previously announced definitive merger agreement, under which Cliffs would have acquired all outstanding shares of Alpha.

The companies said each board’s decision was made after considering various issues, including the current macroeconomic environment, uncertainty in the steel industry, shareholder dynamics and risks and costs of potential litigation. Considering these issues, each board determined that settlement of the litigation and termination of the merger agreement were in the best interests of its equity holders.

Alpha and Cliffs added that, going forward, the companies plan to work together to find ways to realize synergies in their respective coal operations.

Under the terms of the settlement agreement, the merger agreement will be terminated, Cliffs will pay Alpha $70 million, Alpha will dismiss the Delaware litigation with prejudice and the parties will release each other from all obligations with respect to the proposed transaction as well as from any claims arising out of or relating to the merger agreement.

Alpha Natural Resources is a leading supplier of high-quality Appalachian coal to electric utilities, steel producers and heavy industry. Approximately 89 percent of the company’s reserve base is high Btu coal and 82 percent is low sulfur, qualities that are in high demand among electric utilities which use steam coal. Alpha is also the nation’s largest supplier and exporter of metallurgical coal, a key ingredient in steel manufacturing. Alpha and its subsidiaries currently operate mining complexes in four states, consisting of 57 mines supplying 11 coal preparation and blending plants. The company and its subsidiaries employ more than 3,600 people.