The transaction is valued at approximately US$3.7 billion, including Joy Global’s outstanding indebtedness.

Komatsu intends to operate Joy Global as a separate subsidiary of Komatsu and retain the strength of the Joy Global brand names. The companies will align the organisation and operation for optimal customer support from Joy Global’s headquarters in Milwaukee in Wisconsin, US (for Mining Magazine editor Carly Leonida's opinion and analysis of the acquisition and its impact, see the latest Digging Deeper column).

The companies stated that Komatsu and Joy Global’s products and services are highly complementary and the combined organisation will continue to focus on safety, productivity and life cycle cost improvement for customers. Komatsu plans to leverage both companies’ leading technologies to pursue product and service innovation to enhance mine safety and productivity. In addition, the companies employ complementary strategies and are committed to an integrated direct sales and service model.

Ted Doheny, president and CEO of Joy Global, said: “This is a compelling transaction that delivers substantial and certain value to our stockholders as well as expanded options for our customers and employees going forward. We believe this is the right partnership to meet the evolving needs of our customers while furthering our ability to lead the mining industry with game-changing technologies and best-in-class products.

“Joy Global’s board of directors, in making its determination, considered the challenging market conditions the company believes are likely to persist. The mining industry continues to face cyclical headwinds from oversupplied commodities and reduced end user demand resulting in cash flow restrictions for most producers, creating an increasingly challenging environment. We are also seeing structural changes in the US and China coal industry.

“Our companies share similar cultures and values, and we expect many Joy Global employees to benefit from exciting career opportunities as part of an even larger, more diversified company. On behalf of the Joy Global board and management team, we thank our dedicated employees for their continued hard work and commitment to solving mining’s toughest challenges.”

The transaction is expected to close by mid-2017.