Bucyrus to buy Terex mining unit for $1.3 billion
NEW YORK (Reuters) - Terex Corp (TEX.N), the world's No. 3 maker of heavy earth-moving equipment, is to sell its mining business for $1.3 billion cash to mining equipment maker Bucyrus International Inc BUCY.O, the companies said on Sunday.
The unit being sold, which includes hydraulic mining excavators and electric drive mining trucks, has 38 facilities around the world with approximately 2,150 employees.
South Milwaukee, Wisconsin-based Bucyrus said the deal would create a "premier supplier of mining equipment."
Terex can request to receive $300 million of the purchase price in the form of Bucyrus shares, Bucyrus said.
Bucyrus said it had signed a commitment letter with a group of financial institutions to provide funding for the deal by increasing its existing revolving credit facility and with a new term loan facility.
Bucyrus, which competes with Milwaukee-based mining equipment maker Joy Global Inc JOYG.O, said it estimated there are more than $100 million in annual operating synergies that it could generate by 2012.
Greenhill & Co (GHL.N) advised Bucyrus and Goldman Sachs & Co (GS.N) advised Terex.
The deal is subject to regulatory approval and expected to close in the first quarter of 2010, Terex said.
The U.S. heavy equipment industry has been widely expected to consolidate as it has been hit hard by the economic meltdown. The head of Caterpillar Inc's (CAT.N) mining equipment unit said in March the company sensed acquisition opportunities in the mining equipment space as a result of the downturn.
Terex reported a wider-than-expected third-quarter loss in October and warned that weak customer demand made it "unlikely" it would post a profit in the fourth quarter.
Bucyrus in October raised its 2009 revenue view, helped in part by strong after-market bookings.
Shares of Terex closed on Friday down 11 cents at $19.21 and shares of Bucyrus closed down $1.42 at $50.84.