Japan’s Komatsu Ltd has agreed to buy USA mining equipment manufacturer Joy Global Inc for about $2.9 billion, its biggest-ever acquisition, in a bid to strengthen its core mining equipment business. “Over the long term, however, the mining equipment business is projected to grow, driven by population growth and rapid urbanization around the world”, said Komatsu, which is led by president and CEO Tetsuji Ohashi.
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Joy Global Inc. stockholders will receive $28.30 per share in cash, a 21 percent premium to the Milwaukee company’s Wednesday closing price of $23.30. The transaction is valued at approximately $3.7 billion, including Joy Global’s outstanding indebtedness. The deal is expected to close in mid-2017, Komatsu said. Komatsu plans to finance the takeover through funds on hand and bank loans and sees no need to increase capital at this stage.
Joy Global’s chief executive, Ted Doheny, said that while the deal was a “compelling transaction”, it didn’t mean conditions in the sector had improved.
A press release from Komatsu said a “definitive agreement” had been reached by the two companies, “subject to approvals under laws in relevant countries”.
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This story will be updated as more information becomes available.
