Joy Global Inc. and International Mining Machinery Holdings Ltd (IMM) have jointly announced that TJCC Holdings Ltd (TJCC) and Joy have entered into a share purchase agreement, in which TJCC has conditionally agreed to sell 534.8 million shares of IMM to Joy for a purchase price of HK$ 8.50/share, or a total cash consideration of approximately US$ 585 million. These shares represent approximately 41% of the issued share capital of IMM.
Completion is subject to the receipt of necessary approval from the Chinese Anti-monopoly Bureau of the Ministry of Commerce (MOFCOM) and the satisfaction of other customary closing conditions.
Pursuant to Rule 26.1 of the Hong Kong Takeovers Code, upon receipt of MOFCOM approval and completion of the share purchase agreement, Joy Global will be required to make an offer for the remaining approximately 59% of IMM shares. The tender offer will be launched by Joy Global's wholly-owned Hong Kong subsidiary, Newco Hong Kong 123 Ltd, and will be subject to the terms and conditions to be set out in the offer document. The offer document is subject to approval by the Hong Kong Securities and Futures Commission. The transactions will be financed with a combination of cash, borrowings or with cash raised through an equity offering, depending upon the number of shares tendered and the amount of cash on hand.
IMM is a leading designer and manufacturer of underground longwall coal mining equipment in China. It has strong domestic market positions in roadheaders and longwall shearing machines, and is growing the share of its armoured-face conveyor and electric control systems businesses. In addition to original equipment, IMM provides aftermarket parts and services through a broad network of service and warehouse locations. IMM's calendar 2010 financial results had revenues of approximately Yuan 1943 million (US$ 299 million) and adjusted EBITDA of Yuan 585 million (US$ 90 million).
"A core part of our business strategy has been to position ourselves for the high growth of the emerging markets, and the investment in IMM is a major step in the execution of that strategy," said Mike Sutherlin, president and CEO of Joy. "The China coal market is large and diverse, and must be accessed with a multi-dimensional strategy. While the major mines generally use globally sourced equipment, a larger number of mines rely on local Chinese mining equipment manufacturers. Leadership in the China market requires strong positions specific to each segment, and IMM is an established market leader in the local market with premier products for longwall shearing machines and road headers. IMM is a very strong complement to our Joy Mining and P&H businesses, and gives us leading positions in each of the major segments of the China market."
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