Komatsu to Acquire Mining Equipment Manufacturer Joy Global in $3.7 Billion Deal
Japan’s Komatsu, the world’s second largest construction equipment manufacturer, has reached agreement to acquire mining equipment giant Joy Global in a transaction valued at approximately $3.7 billion, including Joy Global’s debt. Stockholders of Milwaukee-based Joy Global will receive $28.30 per share in cash for each outstanding share of common stock held. The acquisition is expected to close in or after April 2017.
Komatsu intends to operate Joy Global as a separate subsidiary of Komatsu and retain the strength of Joy Global’s brand names. The companies will align the organization and operation from Joy Global’s headquarters.
“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 has been hit hard by the global mining slowdown, losing $1.8 billion in the fiscal year ending in October. Both Joy Global and Komatsu have struggled on the stock market since early 2015. Komatsu officials acknowledged that “demand for mining equipment has declined dramatically from the peak, reflecting economic slowdown in emerging countries and low commodity prices. Over the long term, however, the mining equipment business is projected to grow, driven by population growth and rapid urbanization around the world.”
Komatsu added that the two companies’ product lines will integrate well, expanding options for customers worldwide. “Komatsu can now offer the underground mining equipment and super large-sized loading equipment of which Joy Global is a leading provider,” the company said. “Both companies value a direct sales and service approach and will continue to engage with customers globally. Merging manufacturing technologies and linking products through Komatsu’s fleet management system will further capabilities on both sides to directly engage with customers to optimize machine performance and enhance automation for safety and productivity gains.”
Komatsu said the two companies’ product lines are complementary. “Joy Global’s lineup of surface mining equipment includes rope shovels, super large wheel loaders, draglines and drills which Komatsu does not offer,” the company said, adding that these items will be complementary with the super large electric dump truck Komatsu manufactures, generating synergies in sales and service. Also Joy Global offers underground mining equipment that Komatsu does not make.
The acquisition, which was unanimously approved by Joy Global’s board of directors, will strengthen Komatsu’s ability to compete with Caterpillar in the mining sector.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.