Bucyrus International announced on Sunday that it was buying the mining business division of Terex for $1.3 billion in cash. Terex is the world's third largest maker of heavy earth-moving equipment.
The division being sold includes hydraulic mining excavators and electric drive mining trucks. The unit has 38 facilities around the world with over 2,000 employees. Bucyrus said the deal would create a "premier supplier of mining equipment."
The deal is for cash but Terex has the option to take $300 million of the purchase price in Bucyrus stock. Bucyrus said it had a letter of commitment from a group of financial institutions to provide funding for the deal by increasing the existing credit line to Bucyrus.
Bucyrus (BUCY) and Joy Global (JOYG) compete in the mining equipment sector. Bucyrus said they expect $100 million in synergistic benefits from acquiring the Terex business.
The deal is expected to close the first quarter of 2010 but is subject to regulatory approval. Terex recently warned that Q4 would likely be a loss due to weak customer demand. Bucyrus recently upgraded guidance for 2009 saying it was seeing strong after-market bookings.
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