Komatsu To Acquire Joy Global

With the long down cycle in the mining equipment market continuing with little end in sight, many industry analysts and observers have been watching and speculating about the future of Milwaukee, Wis. based Joy Global Inc.

Now we know.

Komatsu Ltd., Tokyo, said it has signed a definitive agreement to acquire 100% of Joy Global Inc., a manufacturer of surface and underground mining equipment.  Komatsu’s announcement said the deal was for $2.891 million, while other reports have pegged it at  $3.7 billion is cash plus $846 million in assumption of debt.   Joy Global will operate as a separate subsidiary of Komatsu.

The deal will be run through Komatsu’s wholly-owned U.S. subsidiary, Komatsu America Corp. The acquisition is expected to close in mid- 2017, subject to the approval of shareholders of Joy Global and the receipt of necessary regulatory approvals in relevant countries.

Joy has annual revenues of $3.1 million US dollars down from $4.4 million as recently as 2011.  The company is a worldwide mining machinery and services company founded in 1884 and includes P&H, Joy and Montabert as its brands.  Joy manufactures and services original equipment and parts for underground and surface mining applications, as well as material handling systems and components for a variety of applications, products that Komatsu said complement its existing products.

Komatsu said it expects the Joy Global product lines to integrate well with its own lines, expanding options for customers worldwide. Joy Global’s lineup of surface mining equipment includes rope shovels, large wheel loaders, draglines and drills which Komatsu does not offer.

Komatsu said Joy Global’s line of rope shovels and large wheel loaders will pair well with its large electric dump trucks. In addition, Joy Global manufactures underground mining equipment, another area Komatsu has not engaged in.

This deal calls to mind Caterpillar’s 2010/2011 $8.6 billion acquisition of Bucyrus International Inc.  That deal put Cat into the dragline business for one and added a range of complementary products to cat’s own mining operations.

Komatsu and Caterpillar have always been fierce competitors in the construction equipment and mining markets.  With this latest deal, the competition heats up even further.