Russian miner OAO Mechel (MTL) Wednesday said it would buy U.S. coal producer Bluestone in a $436 million deal that would give it a foothold in North America and could boost coal output by a quarter.

New York-listed Mechel joins Russian metals firms like OAO Severstal (CHMF.RS) and Evraz Group N.V. (EVR.LN), which have flocked to the world's biggest steel and its raw materials markets in recent years to pursue acquisitions.

"The addition of Bluestone's production assets and large, high-quality coking coal reserves and resources establishes Mechel as one of the largest producers of coking coal in the world and provides us with additional scale that will drive added efficiencies through our business," Mechel's Chief Executive Igor Zyuzin said.

Confirming a local media report from February, Mechel said it would acquire West Virginia-based coking coal producer Bluestone for cash and preferred shares, assuming $132 million in debt in the process.

Bluestone has four mining complexes comprising eight active open pit and five underground mines. Its coking coal holdings include up to an estimated 725 million tons of reserves and resources.

The company sold 2.8 million tons of high-quality, hard coking coal in 2008, generating revenue of $327 million, and has in the past been linked with separate bids from India's Tata Steel (500470.BY), Essar Steel and Russia's Severstal.

Mechel said it plans to raise Bluestone's annual production to 7 million tons, which would add 27% to its 2008 coal output.

It sees the transaction as accretive to 2009 earnings but some analysts questioned the price Mechel is paying.

"On the face it, this deal seems really expensive," said analyst Michael Kavanagh at investment bank UralSib in Moscow. "We would expect the market to react negatively to the news."

Kavanagh, who rates Mechel at hold with a $4 target price, said the transaction implies an enterprise value/earnings before interest, tax, depreciation and amortization multiple of 13.6. He noted that the terms could force Mechel to pay more if the price of its preferred shares don't rise sufficiently.

He also warned that demand for coal may not be sufficient to absorb Bluestone's output.

"It remains to be seen if (Mechel) will be able to move the full volume (of coal in 2009)...given the weak steel market, with U.S. and E.U. steel makers operating at 50% of capacity."

At 1515 GMT, Mechel's American Depositary Receipts were trading 2% higher at $6.18 each on the New York Stock Exchange.

Company Web site: www.mechel.ru

-By Andrew Langley, Dow Jones Newswires; +7 495 937 8445; andrew.langley@dowjones.com