NEW YORK (AP) — Japan’s Komatsu is buying mining equipment maker Joy Global in a deal valued at about $3.7 billion.
Komatsu makes construction, mining, industrial and military equipment.
Joy Global Inc. stockholders will receive $28.30 a share in cash, a 21 percent premium to the Milwaukee company’s Wednesday closing price of $23.30. The company’s stock surged more than 17 percent in pre-market trading on Thursday.
A Joy Global news release states that Komatsu intends to operate the Milwaukee company as a subsidiary and to keep the Joy Global brand on various products. It was not immediately clear how the acquisition would affect employment or Joy Global’s manufacturing operations in Milwaukee.
“The companies will align the organization and operation for optimal customer support from Joy Global’s headquarters in Milwaukee,” according to the release.
“Joy Global’s Board of Directors, in making its determination, considered the challenging market conditions the company believes are likely to persist,” Ted Doheny, president and chief executive of Joy Global, said in a statement. “The mining industry continues to face cyclical headwinds from oversupplied commodities and reduced end user demand resulting in cash flow restrictions for most producers, creating an increasingly challenging environment. We are also seeing structural changes in the U.S. and China coal industry.”
Joy Global employs about 1,000 people in Milwaukee and about 12,000 in total in 20 countries.
The transaction is targeted to close by the middle of next year. It still needs approval from Joy Global stockholders.