Milwaukee-based heavy equipment manufacturer Joy Global has accepted a US$3.7 billion all-cash takeover offer from Japanese giant Komatsu.
Joy Global on July 21 announced its board of directors had unanimously approved a definitive merger agreement under which Komatsu America Corp., a subsidiary of Komatsu Ltd., will acquire Joy Global, including Joy Global’s debt.
Joy Global stockholders will receive $28.30 per share in cash, a 48% premium on the New York-listed company’s volume weighted average over the last 90 days, and a 41% premium on the average over the last 60 days.
Komatsu says it intends to operate Joy Global as a separate subsidiary, and plans to retain the Joy Global brand names.
Joy Globals president and chief executive Ted Doheny said the deal was a good one for shareholders.
“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,” he said.
“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.”
Doheny said the company’s board of directors made the decision with the belief current challenging market conditions will 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,” he said.
“We are also seeing structural changes in the U.S. and China coal industry.
“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.”
In a statement released on July 21, Komatsu said the acquisition was simply good business.
“Joy Global and Komatsu’s product lines will integrate well, expanding options for customers worldwide, as 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.”