Joy Global Sells Asset to Nucor, Agrees to Be Acquired by Komatsu

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Researched by Industrial Info Resources (Sugar Land, Texas)--Last week was a busy one for mining equipment giant Joy Global Incorporated (NYSE:JOY) (Milwaukee, Wisconsin). The company's board of directors approved a definitive merger agreement with Komatsu America Corporation, a subsidiary of Komatsu Limited (Tokyo, Japan) in a transaction valued at about $3.7 billion. The deal is seen as complementary for Komatsu and gives Komatsu greater access to Joy Global's strong presence in the U.S. coal and underground mining equipment market. The acquisition is not scheduled to be finalized until mid-2017.

If the deal moves forward as planned it will be the second big acquisition of a U.S. based mining equipment provider strong in coal and underground markets. Komatsu is hoping this acquisition is better timed. In 2011, at the peak of the mining boom, Caterpillar Incorporated (NYSE:CAT) (Peoria, Illinois) acquired U.S. based Bucyrus for $8.6 billion. Since that time demand for commodities has slowed and commodity prices have tumbled as a result. The coal industry, especially in the North America, has been hardest hit. This year things have turned around somewhat with commodity prices improving for iron ore and coal, but still off of mining boom era numbers. Lately, mining companies and their suppliers appear to be making strategic gambles on the market returning sometime in the next 3-5 year period, by making investments on projects and acquisitions to position themselves for the next upturn.

Prior to the acquisition news, Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) agreed to buy Joy Global's steel mill in Longview, Texas, for $29 million. The Longview Steel Mill was acquired by Joy Global as part of its acquisition of Letourneau in 2011. The Longview Steel Mill has a capacity of 180,000 tons per year of carbon and alloy steel plate products and heat treating capabilities. With the acquisition, Nucor, already the largest steel producer in the U.S., will have three plate mills, including mills in Tuscaloosa, Alabama and Hertford, North Carolina.

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