In later roles, Mike continued his involvement with the mining industry, including a term as CEO and Managing Director of Joy Global Australia Limited, the Australian subsidiary of global market leading underground coal mining equipment manufacturer Joy Global Inc (NasdaqGS:JOYG). Mike has travelled extensively throughout the mining regions of the world and maintains relationships with key executives of all significant mining and energy companies.
In todays news we have
US mining equipment maker Joy Global Inc plans to buy an initial 41 per cent stake in International Mining Machinery Holdings Ltd (IMM) for $US585 million to expand in China's fast-growing coal market.
TJCC Holdings Ltd, a unit of US private equity firm Jordan Co LP, is selling its entire stake in IMM, which makes underground coal mining machinery.
The agreement calls for Joy Global to buy 535 million IMM shares from TJCC for $HK8.50 each, a 30 per cent premium over its last price of $HK6.55 on July 11. Joy Global will be required to make an offer for the remaining 59 per cent of IMM once the share purchase agreement is completed.
IMM posted adjusted operating earnings $US90 million in fiscal 2010, on sales of $US299 million. At least one estimate saw 2011 earnings growing to about $US113 million.
IMM would likely add to Joy Global's fiscal 2012 earnings, several analysts said, depending on how it pays for its purchase. The company said on Thursday it will finance the purchase with a combination of cash and debt, and may issue equity.
Joy Global shares were up 1.2 per cent at $US95.99, after earlier trading as high as $US98.50. Caterpillar turned lower, trading down 0.2 per cent to $US108.43.
Emerging market expansion
Milwaukee-based Joy Global said the deal was part of its strategy of expanding in emerging markets. Although major mines in China use foreign equipment, many others rely on domestic machinery.
The overall Chinese mining market is dominated by coal, of which 90 per cent is underground, in contrast with the U.S coal market which is mostly surface mining, JPMorgan analyst Ann Duignan said in a research note.
The IMM deal is Joy Global's second in a matter of weeks, part of a strategy that analysts have called at least partly defensive. In May, it said it would buy Rowan Companies' drilling and mining gear unit for $US1.1 billion.
The M&A activity follows rival Caterpillar's $US7.6-billion purchase of mining machinery competitor Bucyrus, a deal that leaves Joy Global as the last stand-alone United States-based maker of such equipment.
After recession hit in late 2008, the price of many commodities such as copper, aluminium and iron ore fell as demand from manufacturers dropped off. Mining companies idled production and laid off workers.
But since last year, metals prices have rebounded sharply, prompting producers to reopen mines and start up idled projects. That has put a strain on supplies of equipment, with some producers complaining they cannot get adequate supplies.
Machinery suppliers have consolidated to gain scale.
Joy Global's deal marks a push into the underground mining segment of an equipment market where Caterpillar largely does not participate, Longbow Research analyst Eli Lustgarten said.
"Caterpillar is becoming a major force in the mining market, a powerhouse globally (that) offers mining customers one-stop shopping," Mr Lustgarten said, adding that Caterpillar has a small market share in Chinese mining.
"This is part of the redoing of the landscape of the mining business," he said. "China's mining market is not nearly as important as China's purchases of commodities that drive commodity purchases globally."
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