A Komatsu America employee parks a new piece heavy equipment on the yard Monday at the Chattanooga manufacturing plant. Komatsu employs more than 200 people at the Signal Mountain Road facility.
Staff Photo by Tim Barber/Chattanooga Times Free PressA Japanese manufacturer of mining equipment will spend nearly $3 billion to buy an American equipment maker as they contend with a global mining slump.
The Toyota-based Komatsu, which manufactures earth-moving equipment in Chattanooga, will buy Joy Global, an equipment maker based in Wisconsin, for $28.30 per share, or about $2.9 billion.
Komatsu acknowledged the demand for mining equipment had "declined dramatically," a result of sluggish global economic growth and a commodities glut. But the company said in a news release that it expected population growth and urbanization to drive demand in the long term. Komatsu said Joy Global will add to its ability to offer large loading equipment and equipment for mining underground.
"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," the company said.
Komatsu established its first American manufacturing plant in 1985 when the company purchased and renovated its Signal Mountain Road factory in Chattanooga, where the company makes hydraulic escavators, articulated dump trucks and forestry equioment. Chattanooga also is home for Komatsu's U.S. technical center for product design and development.
Joy Global has been hit hard by the global mining slowdown. It lost $1.18 billion in the fiscal year that ended in October, and its shares have lost more than half their value since the beginning of last year. Komatsu also has seen its shares fall almost 20 percent over the same time.
Joy Global had said it was placed under investigation in 2014 by U.S. securities regulators over its 2012 purchase of International Mining Machinery Holdings Limited in China, which makes coal-mining equipment. Joy Global said last month that regulators had closed the investigation without taking further action.
The Komatsu-Joy Global deal is expected to close in 2017.