We had just discussed the company most like Bucyrus (BUCY) - Joy Global (JOYG) last week [Dec 16, 2009: Joy Global Earnings Report Always Worth a Read] and today we have news on the former.
- Shares of heavy machinery makers Bucyrus International Inc (BUCY) and Terex Corp (TEX) both rose Monday, a day after the companies said Bucyrus would pay $1.3 billion for Terex's mining business.
- 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.
- Bucyrus, whose competitors include Joy Global Inc (JOYG) and Caterpillar Inc (CAT) said the deal would create a "premier supplier of mining equipment." Bucyrus will add product lines that include hydraulic shovels, drills, and electric mining trucks. The deal is expected to close next quarter.
- Terex will redeploy the capital from the sale within its existing businesses, as it focuses on its crane, construction equipment and aerial work platform businesses. It said the mining business would have required substantial investment in order to grow, including in its distribution network, which Bucyrus already has in place.
- The mining segment accounted for about 15 percent of Terex's 2008 sales and 23 percent of its operating profit, according to presentation materials. But Terex said mining accounted for a higher percentage of its working capital over the past five years.