Komatsu has announced that it has signed a definitive agreement with Joy Global Inc. a leading manufacturer of surface and underground mining equipment, under which Komatsu America Corp. a wholly-owned subsidiary of Komatsu in the USA, will acquire 100 percent ownership of Joy Global The Acquisition is expected to close in mid-2017, subject to the approval of shareholders of Joy Global and the receipt of necessary regulatory approvals under laws. The Acquisition is in line with Komatsu's strategy to strengthen it's core mining equipment business in an effort to achieve sustainable growth.
Joy Global is a worldwide mining machinery and services company founded in 1884. Through its leading brands – P&H, Joy and Montabert – Joy Global manufactures and services advanced original equipment and parts for underground and surface mining applications, as well as material handling systems and components for a variety of applications, products that complement existing Komatsu products. The company's integrated technology, services and solutions are a critical component of operations in a variety of commodity markets including energy, hard rock and industrial minerals. Komatsu has engaged in the mining equipment business since its foundation in 1921. In the 1990s the Company expanded by acquiring selected mining equipment manufacturing and distribution businesses operating in major mining regions. Today, Komatsu's annual revenue from mining equipment business is generated by surface mining equipment only, as the Company's portfolio does not include equipment for underground mining. Further, the Company's product lineup does not include super large-sized loading equipment for surface mining.
Demand for mining equipment has declined dramatically from the peak, reflecting economic slowdown in emerging countries and low commodity prices. Over the long term, however, the mining equipment business is projected to grow, driven by population growth and rapid urbanization 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.
Joy Global and Komatsu's product lines will integrate well, expanding options for customers worldwide, as Komatsu can now offer the underground mining equipment and super large-sized loading equipment of which Joy Global is a leading provider. Both companies value a direct sales and service approach and will continue to engage with customers globally. Merging manufacturing technologies and linking products through Komatsu's fleet management system will further capabilities on both sides to directly engage with customers to optimize machine performance and enhance automation for safety and productivity gains.
Joy Global's lineup of surface mining equipment includes rope shovels, super large wheel loaders, draglines and drills which Komatsu does not offer. Joy Global's lineup of rope shovels and super large wheel loaders pair well with the super large electric dump truck Komatsu manufactures and will generate synergies in sales and services. In addition, Joy Global manufactures underground mining equipment, another area Komatsu has not engaged in. With the Acquisition, Komatsu will become a meaningful participant in underground mining as well. The Acquisition will allow Komatsu to offer products to customers in both surface mining and underground mining businesses.
Joy Global places priority on providing solutions that enhance safety and productivity of customer operations. For example, JoySmart Solutions leverages the Internet of Things to connect customer products with experts using data and analytics to improve mine performance. Komatsu also engages in the improvement of safety and productivity with its Autonomous Haulage System, mine fleet management systems and KOMTRAX Plus, which all serve to visualize jobsite operations. Data obtained from IoT-based mining equipment and systems will be connected and used through the open platform of Komatsu and this will bring synergies in providing Dantotsu solutions to customers.
Joy Global will operate as a separate subsidiary of Komatsu. The companies will work together to align the organization and operation to better support our customers while retaining the strengths of Joy Global, its brand and the "direct sales/services" scheme. The corporate culture that values pursuit of safety, improvement of customer productivity ($/ton reduction) and focus on customer-perspective are in harmony with the corporate culture of Komatsu. Komatsu highly respects that the Joy Global operation is finely attuned to the mining industry and will seek to maximize the synergies from the Acquisition.