OREANDA-NEWS. July 25, 2016. Komatsu will acquire mining machinery manufacturer Joy Global for US\\$3.7 billion. The acquisition is the first major step for Komatsu into the underground mining space since its partnership with GE to develop underground mining technology, as despite the fact it has manufactured mining equipment since 1921 “the company’s portfolio does not include equipment for underground mining”, australianmining.com.au reported with the reference to Komatsu’s release. The acquisition also provides a new line of surface equipment.

The company is reliant on “population growth and rapid urbanisation around the world. In terms of mining techniques, economic rationale will call for use of larger equipment in surface mining as well as further development of underground mining”.

Caterpillar carried out a similar move in 2011, acquiring Bucyrus in order to gain exposure to underground mining and access the dragline market.

The acquisition itself is structured as “a reverse triangular merger between Joy Global and a wholly owned subsidiary Komatsu has established for the purpose of the acquisition”.

Joy Global will be the surviving company and the shareholders of Joy Global will receive a cash payment of US\\$28.30 per share, representing a 48 per cent premium.