Japanese mining equipment maker Komatsu’s subsidiary Komatsu America has signed an agreement to acquire US-based mining solutions provider Joy Global for approximately $3.7bn, including debt.
As per the terms of the deal, Komatsu will acquire 100% stake in Joy Global for $28.30 per share.
Upon completion of the deal, Komatsu plans to operate Joy Global as a separate subsidiary while retaining its brand names.
Joy Global president and CEO Ted Doheny said: “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.
“The mining industry continues to face cyclical headwinds from oversupplied commodities and reduced end user demand resulting in cash flow restrictions for most producers, creating an increasingly challenging environment. We are also seeing structural changes in the US and China coal industry.”
The acquisition is part of Komatsu’s plans to strengthen its core mining equipment business in order to achieve sustainable growth.
For optimal customer support, the companies, plans to align the organization and operation from Joy Global’s headquarters in Wisconsin.
Joy Global currently employs 12,000 people, with operations spread across 20 countries.
Komatsu expects the combined organization to focus on safety, productivity and life cycle cost improvement for customers.
Joy said that the decision to sell comes as it intends to continue its operations amid challenging market conditions.
Komatsu plans to leverage both companies’ technologies in order to pursue product and service innovation to improve mine safety and productivity.
Planned to be completed by mid-2017, the deal is subject to customary closing conditions, including approval by Joy Global stockholders and certain regulatory approvals.
Image: A Komatsu’s dump truck for mining. Photo: courtesy of Komatsu Ltd.