Komatsu to Acquire US Mining Equipment Manufacturer Joy Global
Komatsu Ltd. announces that it has signed a definitive agreement with Joy Global Inc., a leading manufacturer of surface and underground mining equipment, under which Komatsu America Corp., a wholly-owned subsidiary of Komatsu in the USA, will acquire 100 percent ownership of Joy Global. 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 under laws in relevant countries.
Purpose of the Acquisition
Komatsu embarked in April on a mid-range management plan for the next three years (2016-2018) under the slogan "Together We Innovate GEMBA Worldwide - Growth Toward Our 100th Anniversary (2021) and Beyond". The Acquisition is in line with the growth strategy of the plan, which calls for the company to strengthen the core mining equipment business in an effort to achieve sustainable growth.
Joy Global is a worldwide mining machinery and services company founded in 1884. Through its leading brands - P&H, Joy and Montabert - Joy Global manufactures and services advanced 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 complement existing Komatsu products. The company's integrated technology, services and solutions are a critical component of operations in a variety of commodity markets including energy, hard rock and industrial minerals. The company operates globally and generates an annual revenue of $3.1 million.
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. 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 will continue to offer Dantotsu products, Dantotsu services, and Dantotsu solutions to their customers to jointly create innovation in mining operations.
Benefits of the Acquisition
The corporate culture at Joy Global values pursuit of safety, improvement of customer productivity, and the drive for innovation. This is similar to the corporate culture at Komatsu. Komatsu and Joy Global also share the approach of offering "direct sales/services" to customers, engaging with them directly to address issues at their jobsites. The Acquisition of Joy Global, which shares similar cultures, values and strategies with Komatsu, is expected to bring Komatsu the following two benefits: complementary product lineup and stronger Dantotsu solution offerings.
Structure of the Acquisition
This Acquisition is structured as a reverse triangular merger between Joy Global and a wholly owned subsidiary KAC has established for the purpose of the Acquisition. Joy Global will be the surviving company and the shareholders of Joy Global will receive the cash payment as described below. At the same time, shares of the Acquiring Subsidiary owned by KAC will be converted into outstanding shares of the surviving company, making the surviving company the wholly-owned subsidiary of KAC. The Acquisition is subject to approval by the meeting of shareholders of Joy Global, receipt of necessary regulatory approvals under the applicable laws in relevant countries, and the satisfaction of other customary closing conditions stipulated in the Acquisition agreement. Under the Acquisition agreement, Komatsu guarantees the performance of obligations of KAC and the Acquiring Subsidiary.
Komatsu will acquire Joy Global for $28.3 per share (a total of approximately $2.89 million). Komatsu plans to finance the Acquisition through funds on hand and bank loans and does not plan to increase capital at this stage.
After the Acquisition is complete, Joy Global will become a consolidated subsidiary of Komatsu. The Company will make a disclosure of the impact of the Acquisition on its performance in a timely fashion as needed after the close of the transaction.
As the Acquisition is expected to close in or after April 2017, the Acquisition will have no impact on the results and performance of Komatsu for the fiscal term ending March 2017.