As per a media report, mining equipment manufacturer Joy Global Incorporation (JOYG) is in talks to acquire the Chinese coal mining equipment maker International Mining Machinery Holdings Ltd. (“IMM”). If the deal goes through, Joy Global will be able to expand its presence in the world’s largest coal producing country, China.
International Mining Machinery Holdings Ltd. is a leading Chinese designer and manufacturer of underground coal mining equipments. The major products of the company are roadheaders, shearers and armored-face conveyors. All these products enjoy robust demand among the Chinese coal mining companies, as exemplified by a 27.8% year-over-year rise in revenues for the company in 2010.
Joy Global seems to leverage its strong financial position and acquire assets to strengthen its market share in the mining equipment industry. The company had cash and short-term investments of $1.07 billion as of April 29, 2011, up from $0.81 billion as of October 29, 2010. Total long-term debt was $0.39 billion as of April 29, 2011.
Only recently Joy Global acquired LeTourneau Technologies Inc. from Rowan Companies Inc. (RDC) for $1.1 billion in cash. The company expects LeTourneau’s wheel loaders, which are the largest and most fuel efficient in the industry, along with complementary applications from Joy’s electric mining shovels to deliver significant synergies.
We trust these acquisitions will give Joy Global the wherewithal to compete with its peer and industry leader Caterpillar Inc. (CAT). Caterpillar recently concluded the huge $8.8 billion (including debt) buyout of Bucyrus International Inc. These strategic and timely acquisitions by both Caterpillar and Joy Global are made to capitalize on and reap the benefits of the rising demand for coal and minerals triggered by growth in emerging nations.
Joy Global currently retains a Zacks #1 Rank (short-term Strong Buy rating).
Mining equipment manufacturer and service provider Joy Global Inc. is based in Milwaukee, Wisconsin. The company caters to consumers all around the world and provides manufacturing, distributing and servicing equipment for surface mining, through its P&H Mining Equipment division, underground mining, through its Joy Mining Machinery division and bulk material conveyor systems, through its Continental Crushing & Conveying division.
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