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Bucyrus International to buy Terex Mining

BUCYRUS International Inc. have signed a definitive agreement to acquire the Terex mining equipment business for US$1.3 billion in cash, a deal that will make the South Milwaukee-based company the largest mining equipment maker in the world.

Under the terms of the agreement, which has been approved by both boards of directors, Bucyrus will acquire those subsidiaries and assets of Terex Corporation used to design, manufacture and sell hydraulic excavators, surface mining trucks, drills (other than auger drills), highwall miners, and related components, parts and after-sales service, commonly known as O&K, Unit Rig, Reedrill, Superior Highwall, Halco, and Hypac.

The Terex mining equipment business has 38 facilities around the world with approximately 2,150 employees. As a result of the transaction, Bucyrus will double their addressable market from around US$15 billion to over US$30 billion and create a team of approximately 10,000 people in nearly 100 locations around the world.

The transaction, which is not subject to shareholder approval by either company but is conditional upon certain regulatory approvals and other customary closing conditions, is expected to be completed during the first quarter of 2010.

Ronald M. DeFeo, Terex chairman and chief executive officer, described the sale of Terex Mining to Bucyrus as good for customers, team members and shareholders alike. ‘This transaction accelerates the transformation of Terex Corporation as we move from a construction and mining equipment company to a machinery and industrial products business,’ he commented.

‘The attractive cash offer provides us excellent financial flexibility, as our cash balance will substantially equal our outstanding indebtedness. The approximately US$1 billion of after-tax proceeds will allow Terex to invest in its current, high return-on-capital businesses, or to look to add new, well positioned niche manufacturers with strong market presence to the company’s portfolio.

‘We are confident that both companies’ stakeholders will benefit from the transaction, with our mining customers being the ultimate beneficiaries.

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