Mining equipment maker Komatsu (TYO: 6301) scored a major win Wednesday as shareholders in its US-based competitor Joy Global (NYSE:JOY) overwhelmingly approved the proposed sale to the Japanese firm.
The $3.7 billion transaction, first announced in July, is the latest takeover in a string of outbound M&A deals by Japanese companies encouraged by a strong yen.
“[The] approval represents a key milestone on the path to completing the transaction, which will deliver compelling value to Joy Global stockholders and further our ability to lead the mining industry,” Ted Doheny, the company’s President and CEO said in the statement.
Under the terms of the agreement, Joy Global stockholders will receive $28.30 per share in cash for each outstanding share of common stock held, representing a 48% premium to the volume weighted average closing price of Joy Global’s common stock for the 90 trading days, and a 41% premium to the volume weighted average closing price of the firm’s common stock for the 60 trading days prior to July 21, the day the deal was announced.
Stronger in the West
The deal, Komatsu’s biggest-ever acquisition, is set to boost its ability to compete with Western rivals, particularly Caterpillar (NYSE:CAT).
The transaction still remains subject to other closing conditions and regulatory clearances in other countries. Regulators in the U.S. and Canada have already cleared the transaction, which is on track to close in early- to mid-2017.
Joy Global will operate as a separate subsidiary of the Tokyo-based firm, the world’s second-biggest mining and construction equipment maker, and will retain the Joy Global name and headquarters in Milwaukee, company officials have said.
Currently, Komatsu only makes surface-mining equipment, while Joy is the largest independent manufacturer of machines used underground.
The deal is expected to close next year.