Investopedia: Joy Global Fills A Gap

With Caterpillar's (NYSE:CAT) acquisition of Bucyrus making it a soup-to-nuts provider of equipment to the mining industry, the question has lingered as to how Joy Global (Nasdaq:JOYG) would respond. Would Joy Global consider a merger with another global equipment company like Komatsu (Nasdaq:KMTUY.PK) or Atlas Copco, or would it try to buy or build its way closer to parity with Caterpillar's offerings? 

Right now, it looks as though Joy Global is taking the second approach.

Making a Deal with Rowan
Joy Global and Rowan (NYSE:RDC) announced Monday morning that they had reached an agreement whereby Joy Global would acquire Rowan's LeTourneau Technologies business. Rowan had been looking to sell this business, and the purchase price of $1.1 billion is a reasonable premium to the $700 million to $900 million range that many analysts had applied to the business.

At $1.1 billion, Joy Global is paying about 10.5 times trailing EBTIDA and perhaps even less on a pro forma basis if Joy Global's assumptions about synergies prove accurate.


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