Milwaukee-based Joy Global Inc. has reached a purchase agreement for a 41% share of International Mining Machinery Holdings Ltd., a Chinese designer and manufacturer of underground coal mining equipment. The agreement is with TJCC Holdings Ltd., and is valued at $585 million. It will be the second major acquisition this year for Joy Global, which lately paid $1.1 billion for LeTourneau Technologies Inc.
“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,” stated Joy Global president and CEO Mike Sutherlin.
Joy Global produces the P&H and Joy brand surface and underground mining equipment, while IMM designs and manufactures underground longwall coal mining equipment, and Joy Global emphasized IMM reported 2010 revenues of approximately $299 million, with adjusted EBITDA of $ 90 million. It has a strong Chinese market position in 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,” Sutherlin explained. “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.”
TJCC Holdings Ltd. is a subsidiary of The Jordan Co., a private equity firm.
The final deal must be approved by China’s Anti-Monopoly Bureau of the Ministry of Commerce, as well as other standard closing conditions.
Joy Global explained that once it has attained the Anti-Monopoly Bureau’s approval and completes its share purchase agreement, it would be required to make an offer for the remaining 59% of IMM shares.
The tender offer will be launched by Newco Hong Kong 123 Ltd., Joy Global’s wholly owned, Hong Kong subsidiary.