Terex Corporation (TEX), the world’s nr. 3 maker of heavy duty-moving equipment has agreed to sell its mining division to construction and mining equipment manufacturer Bucyrus Int’l Inc. (BUCY) for $1.3 billion in cash.
The transaction, which is structured to be an all-cash acquisition and doesn’t require shareholder approval, is expected to close in the first quarter of 2010, the companies said.
“Customers will reap benefits from this transaction as Bucyrus will be able to offer a broad, complementary product line that is driven by technology, quality, and first-class service,” said Tim Sullivan, Bucyrus CEO, in a statement late Sunday. ”
South Milwaukee, Wisconsin-based Bucyrus said the Terex division being sold has 38 facilities around the world with approximately 2,150 employees. Bucyrus –a company with annual revenue of about $2.75 billion and 7,200 employees — also said that the acquisition would create a “premier supplier of mining equipment”, place a team of 10,000 people in nearly 100 locations around the world, and most importantly, double the co.’s addressable market from about $15 billion to $30 billion.
Under the terms of the agreement, which is subject to regulatory approvals, Westport, Conn.-based Terex may request to receive $300 million of the purchase price in the form of Bucyrus shares based on Bucyrus’ current trading price (BUCY closed on Friday down $1.42 at $50.84).
“This transaction accelerates the transformation of Terex Corporation as we move from a Construction and Mining Equipment Company to a Machinery and Industrial Products business,” said Ronald M. DeFeo, Terex Chairman and CEO. “The approximately $1 billion of after-tax proceeds will allow Terex to invest in its current, high return-on-capital businesses, or to look to add new, well positioned niche manufacturers with strong market presence to the company’s portfolio,” DeFeo said.
Greenhill & Co (GHL) advised Bucyrus in the transaction, and Goldman Sachs (GS) advised Terex, which held a several-months auction of the unit.