Komatsu acquires mining equipment maker Joy Global
Japanese machinery giant Komatsu has announced the acquisition of US mining equipment manufacturer Joy Global, in a move aimed at strengthening Komatsu’s mining industry operations.
Joy Global is the parent company to a number of mining equipment brands including surface mining firm P&H, hydraulic drill manufacturer Montabert and the eponymous Joy Mining Machinery.
The transaction has been valued at approximately US$3.7 billion (just over AU$4.9 billion) and includes Joy Global’s outstanding debts. Joy Global shareholders will reportedly receive US$28.30 (AU$37.90) per share, which represents about a 20 percent premium on last week’s closing price and a close to 50 percent premium on the stock’s average price over the last quarter.
The acquisition is set to go through by mid-2017, subject to Joy Global shareholder and regulatory approval.
Komatsu intends to operate Joy Global as a separate subsidiary of Komatsu, retaining the brands and brand recognition of Joy Global.
Komatsu’s mining operations currently generate around AU$5.6 billion annually and consist of smaller-scale surface mining equipment. Komatsu says it intends to expand this part of the business to include underground equipment and larger-scale surface equipment.
Representatives from Joy Global have praised the highly complementary nature of the two businesses, saying the deal is beneficial to both customers and employees of the two companies.
"This is a compelling transaction that delivers substantial and certain value to our stockholders as well as expanded options for our customers and employees going forward," Joy Global president and CEO Ted Doheny says.
"Our companies share similar cultures and values, and we expect many Joy Global employees to benefit from exciting career opportunities as part of an even larger, more diversified company."
Komatsu says that although demand for mining equipment has declined recently, long-term projections predict the demand will return as rapid urbanisation and population growth occurs around the world.
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