MILWAUKEE _ Milwaukee-based Joy Global Inc. is being acquired by Komatsu Ltd., the second-biggest mining and construction equipment maker in the world, for $2.89 billion.
Komatsu will pay $28.30 a share in cash, it said Thursday in a statement, an offer 20 percent higher than Joy's closing price the day before. It will be Komatsu's biggest-ever acquisition, bolstering its ability to compete with larger rival Caterpillar Inc.
Joy is the largest independent maker of underground mining equipment and has long been viewed as a potential target for Komatsu, which manufactures dump trucks and large excavators for companies such as Rio Tinto Group.
Altogether, Joy Global employs about 1,000 people in Milwaukee and 12,000 worldwide.
The company says it intends to keep its headquarters in Milwaukee, at least for now. Company managers were reportedly meeting with their employees to discuss the sale.
The mining equipment industry has some of the highest-paying jobs in Milwaukee manufacturing, with annual pay sometimes topping $80,000.
Joy Global and the South Milwaukee-based mining equipment division of Caterpillar Inc. have laid off hundreds of people as the result of a deep and prolonged downturn in the mining industry.
Some people with decades of experience at Caterpillar and Joy Global are among those on layoff, without knowing when they will be called back to work.
The layoffs have hit the union workforce especially hard.
This year, Joy Global's new mining equipment sales could be down about 50 percent from the recent peak in 2012, and the decline in spending at mines could extend into 2017, according to analysts.
Komatsu said it intends to operate Joy Global as a separate subsidiary of Komatsu and retain the Joy brand names.
The Milwaukee company was created from the bankruptcy of the former Harnischfeger Industries. Harnischfeger was the corporate parent of Beloit Corp. when it filed for bankruptcy protection in 1999 and later emerged as Joy Global.
The Komatsu deal is subject to approval from regulators in the U.S. and Japan and is expected to be finalized in mid-2017.
"This is a compelling transaction that delivers substantial and certain value to our stockholders as well as expanded options for our customers and employees going forward," said Ted Doheny, president and chief executive officer of Joy Global.
"We believe this is the right partnership to meet the evolving needs of our customers while furthering our ability to lead the mining industry with game-changing technologies and best-in-class products," he added.
Joy Global said its board of directors, in making its determination, considered the challenging market conditions the company believes are likely to persist.
"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," the company said in a statement.
A number of Japanese companies have taken advantage of a stronger yen to pursue overseas firms. Acquiring Joy Global will help Komatsu expand into hard-rock mining for metals like copper.
Komatsu generates annual revenue of more than $17 billion, with about 25 percent of it from mining equipment sales.
The company plans to finance the acquisition with funds on hand and bank loans.
Komatsu looked at Joy as recently as 2012 but rejected a deal after concluding there were few cost savings, according to Bloomberg Business News.
