Komatsu to acquire Joy Global

Komatsu will acquire Joy Global to strengthen its core mining equipment business in an effort to achieve sustainable growth.

Joy Global is a worldwide mining machinery and services company founded in 1884. Through its leading brands, P&H, Joy and Montabert, Joy Global manufactures and services advanced original equipment and parts for underground and surface mining applications, as well as material handling systems and components for a variety of applications. These products complement the company’s existing Komatsu products. The company’s integrated technology, services and solutions are a critical component of operations in a variety of commodity markets including energy, hard rock and industrial minerals. The company operates globally and generates an annual revenue of US$3,172 million.

Komatsu has engaged in the mining equipment business since its foundation in 1921. In the 1990s the company expanded by acquiring selected mining equipment manufacturing and distribution businesses operating in major mining regions.

At present, Komatsu’s annual revenue is generated by surface mining equipment only, as the company’s portfolio does not include equipment for underground mining. Its product line-up also does not include super large-sized loading equipment for surface mining.

Joy Global and Komatsu’s product lines will integrate well, expanding options for customers worldwide, as Komatsu can now offer the underground mining equipment and super large-sized loading equipment of which Joy Global is a leading provider. Both companies value a direct sales and service approach and will continue to engage with customers globally. Merging manufacturing technologies and linking products through Komatsu’s fleet management system will further capabilities on both sides to directly engage with customers to optimize machine performance and enhance automation for safety and productivity gains.

Joy Global’s lineup of surface mining equipment includes rope shovels, super large wheel loaders, draglines and drills which Komatsu does not offer. Joy Global’s lineup of rope shovels and super large wheel loaders pair well with the super large electric dump truck Komatsu manufactures and will generate synergies in sales and services. In addition, Joy Global manufactures underground mining equipment, another area Komatsu has not engaged in.

Joy Global places priority on providing solutions that enhance safety and productivity of customer operations. For example, JoySmart Solutions leverages the Internet of Things to connect customer products with experts using data and analytics to improve mine performance. Komatsu also engages in the improvement of safety and productivity with its Autonomous Haulage System, mine fleet management systems and KOMTRAX Plus, which all serve to visualize jobsite operations. Data obtained from IoT-based mining equipment and systems will be connected and used through the open platform of Komatsu and this will bring synergies in providing Dantotsu solutions to customers.

Structure of the Acquisition

This Acquisition is structured as a reverse triangular merger between Joy Global and a wholly owned subsidiary KAC has established for the purpose of the Acquisition (“Acquiring Subsidiary”). Joy Global will be the surviving company and the shareholders of Joy Global will receive the cash payment as described below. At the same time, shares of the Acquiring Subsidiary owned by KAC will be converted into outstanding shares of the surviving company, making the surviving company the wholly-owned subsidiary of KAC. The Acquisition is subject to approval by the meeting of shareholders of Joy Global, receipt of necessary regulatory approvals under the applicable laws in relevant countries, and the satisfaction of other customary closing conditions stipulated in the Acquisition agreement. Under the Acquisition agreement, Komatsu guarantees the performance of obligations of KAC and the Acquiring Subsidiary.

Komatsu will acquire Joy Global for U$ 28.3 per share (total of approximately 2,891 million US dollars * (approximately 303.6 billion yen at 105yen/U$)). Komatsu plans to finance the Acquisition through funds on hand and bank loans and does not plan to increase capital at this stage.

Management policy after the Acquisition

Joy Global will operate as a separate subsidiary of Komatsu. The companies will work together to align the organization and operation to better support our customers while retaining the strengths of Joy Global, its brand and the “direct sales/services” scheme. The corporate culture that values pursuit of safety, improvement of customer productivity ($/ton reduction) and focus on customer-perspective are in harmony with the corporate culture of Komatsu. Komatsu highly respects that the Joy Global operation is finely attuned to the mining industry and will seek to maximize

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