TOKYO – Japanese mining equipment maker Komatsu Ltd has agreed to buy U.S. rival Joy Global Inc for $2.9 billion, its biggest-ever acquisition, to boost its clout in the mining industry.
The deal, worth $3.7 when Joy’s debt is included, will roughly double the size of Komatsu’s manufacturing equipment business and give it access to Joy’s underground mining business. Joy has suffered from its significant exposure to North America’s coal market, which faces regulatory pressure and competition from cheap natural gas.
Komatsu said on Thursday that it would acquire 100 percent of the Milwaukee-based company for $28.30 per share, about a 20 premium to Wednesday’s closing price and an almost 50 percent premium to where the stock has traded in the last three months.
A number of Japanese companies have been taking advantage of a stronger yen to pursue overseas deals. The dollar has fallen 10 percent against the yen this year. Sterling has also slipped. Earlier this week, tech investor SoftBank bought U.K. chip designer ARM in Japan’s largest-ever outbound M&A deal.
For Komatsu, acquiring the smaller Joy will help the Japanese equipment maker expand into hard-rock mining for metals such as copper. Komatsu currently produces only surface-mining equipment. Joy also manufactures larger dump trucks – key to cost savings in surface mining.
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