Komatsu to take over Joy Global
Japanese construction equipment manufacturer Komatsu has agreed to pay US $2.9bn (£2.2bn) for US mining machinery maker Joy Global.
Komatsu is taking advantage of the downturn in demand for mining machinery to make its biggest ever acquisition.
Including Joy Global debt that Komatsu will take on, the transaction is valued at $3.7bn
Joy Global makes P&H, Joy and Montabert branded equipment for underground and surface mining applications, as well as material handling systems and components. It has seen the value of its net assets decline from $2.86bn in 2013 to $1.42bn last year. Annual sales fell from $5bn top $3.2bn over the same period.
On completion of the deal, expected in mid-2017, Joy Global will operate as a separate subsidiary of Komatsu, with brand names retained.
“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,” said Ted Doheny, president and CEO of Joy Global. “We believe this is the right partnership to meet the evolving needs of our customers while furthering our ability to lead the mining industry with game-changing technologies and best-in-class products. Joy Global’s board of directors, in making its determination, considered the challenging market conditions the company believes are likely to persist. 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.”
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This article was published on 22 Jul 2016 (last updated on 22 Jul 2016).