Milwaukee-based Joy Global Inc. has completed the first stage of its acquisition of International Mining Machinery Holdings Ltd. and is proceeding with a tender offer for the remaining 31% of the longwall coal mining equipment specialist. Joy Global, a surface and underground mining equipment builder, paid a reported $584 million for a 41% stake in IMM, and as a consequence of previous share buying it now controls approximately 30.8% of the Hong Kong-based company.
Longwall mining is a mining process that removes a “wall” of coal from an underground shaft in a single slice, up to 2 meters thick, up to 4 kilometers long, and up to 400 meters wide. Market analysis shows that China’s mining sector requires a multilateral approach, in terms of the types of equipment offered for different mining processes. In addition, Joy Global is seen to be taking advantage of low-cost coal mining opportunities in China, and elsewhere.
“A core part of our business strategy has been to position ourselves for the high growth of the emerging markets, and the investment in IMM is a major step in the execution of that strategy,” Joy Global president and CEO Mike Sutherlin explained in July, when the deal was announced. The closing of the investment was awaiting approval by China’s Anti-Monopoly Bureau of the Ministry of Commerce.
Now, the Hong Kong Takeovers Code requires Joy Global to make an unconditional cash tender offer for the remaining IMM shares it does not own, and that offer is being made through a new wholly owned Hong Kong subsidiary.
Joy Global produces the P&H and Joy brand surface and underground mining equipment, while IMM designs and manufactures underground longwall coal mining equipment. It has a strong position in the Chinese market position with its roadheaders and longwall shearing machines, and is gaining market-share for its armored-face conveyor and electric control systems businesses.
IMM also supplies aftermarket parts and services through a network of service centers and warehouses.
“The China coal market is large and diverse, and must be accessed with a multi-dimensional strategy,” according to Sutherlin. “While the major mines generally use globally sourced equipment, a larger number of mines rely on local Chinese mining equipment manufacturers. Leadership in the China market requires strong positions specific to each segment, and IMM is an established market leader in the local market with premier products for longwall shearing machines and road headers. IMM is a very strong complement to our Joy Mining and P&H businesses, and gives us leading positions in each of the major segments of the China market.”