Komatsu, the world’s second largest manufacturer and supplier of earth-moving equipment, announced on July 21 it would buy Joy Global, a leading manufacturer of surface and underground mining equipment, for US$3.7 billion cash.
The deal is expected to close in mid-2017 and will add underground mining equipment and super large-sized loading equipment to Komatsu’s manufacturing range. Joy Global, a Wisconsin-based company with 12,000 workers in 20 countries, will become a subsidiary of Tokyo-based Komatsu and retain the Joy Global brand.
“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,” said Joy Global’s president and CEO, Ted Doheny, in a press release.
Joy Global currently has more than 10 operations across Canada, manufacturing surface mining equipment in Calgary, and underground mining equipment near Sudbury, Ontario. The company also has sales and service locations at major mining centres across the country, from Sparwood, British Columbia to Labrador City.
Komatsu president and CEO Tetsuji Ohashi predicted demand for mining equipment will grow in the mid- to long-term as commodity prices recover and consumption of major commodities increases to meet global needs. In a presentation to investors when announcing the acquisition, he outlined how the addition of Joy Global’s larger surface machinery and underground mining equipment will meet the demand for larger, more productive haul trucks, and prepare the company for the shift from surface to underground mining expected over the next 25 years.
The Joy Global acquisition is Komatsu’s largest-ever deal. The agreement still needs to be approved by regulators in the relevant countries and Joy Global shareholders, who are set to receive $28.30 per share.