Joy to buy LeTourneau, Cat gets DoJ clearance for Bucyrus deal, ABB acquires Mincom
Joy Global Inc. announced in mid-May it plans to acquire LeTourneau Technologies Inc., which manufactures a range of equipment used in various industrial segments including mining, forestry and drilling. The mining products business, located in Longview, Texas, USA, is a supplier of large, electric-drive wheel loaders for surface mining, ranging from the 1,050-hp (782-kW), 54,000-lb-payload (24 500-kg) L-950 to the 2,300-hp (1,715-kW), 160,000-lb-payload (72 600-kg) L-2350. LeTourneau’s mining products business had calendar 2010 revenue of $259 million. It has been a subsidiary of Rowan Companies Inc., a Houston, Texas-based provider of oil drilling rigs and services, since 1994.
According to a statement issued by Joy, the transaction has been approved by both companies’ boards of directors. Completion is subject to the receipt of necessary regulatory approvals and other customary closing conditions and is expected to occur within 60 days. Joy said it will finance the $1.1-billion-deal with a combination of cash and additional borrowings.
“This acquisition represents a compelling opportunity for Joy Global Inc. and our shareholders, with strong growth prospects for both the mining products and drilling products business segments,” said President and CEO Mike Sutherlin. “The LeTourneau mining products business is a natural fit with our P&H business. It adds another solution for surface loading that complements our electric mining shovels, and gives us access to smaller and non-electrified mines.
“The drilling products business moves us into another area of resource extraction that has similar fundamentals and value drivers as surface and underground mining, and therefore is a good fit for our business model,” he said.
Joy described LeTourneau as “well positioned” to grow its mining business as mine expansion continues. It is the only manufacturer of electric-drive loaders; the company’s largest models are considered to be the only wheel loaders capable of loading 400-ton-capacity haul trucks. LeTourneau’s mining products business will be integrated with Joy Global Inc.’s P&H Mining Equipment business.
Randy Baker, president and COO of P&H Mining Equipment said, “The addition of LeTourneau’s front-end loaders will enhance our product offering and leverage our existing manufacturing and product distribution networks. We expect a smooth integration since P&H already serves as a dealer for LeTourneau in key geographies around the world.
“We believe the LeTourneau business gives us the opportunity to further build our Life Cycle Management strategy by adding a complementary product range that brings volume and scope to our aftermarket business. We intend to use this acquisition to more efficiently provide our customers with better service levels. As a result, we will look for ways to integrate the LeTourneau and P&H field facilities and distribution activities.”
LeTourneau’s drilling products business designs offshore jack-up drilling rigs and manufacturers primary components for these rigs. It is also a manufacturer of drilling equipment for large land and offshore rigs and of specialty steel products. LeTourneau’s drilling products business had calendar 2010 revenue of $556 million.
Joy said LeTourneau had revenues of $815 million in calendar year 2010, and although the acquisition “is primarily focused on growth and operating leverage opportunities,” Joy estimates there will be as much as $40 million in synergies, achievable by 2013, as a result of manufacturing and supply chain efficiencies across both segments and the integration of aftermarket infrastructure in mining. The company also expects the LeTourneau drilling products business will realize higher incremental margins as volumes improve from 2010.
In February, LeTourneau Technologies said it had begun commercially producing its Generation II loaders featuring the company’s patented Switched Reluctance (SR) hybrid electric drive system. The SR system, according to LeTourneau, can recover 100% of the braking energy that would normally be lost during a typical loading cycle, resulting in significantly better fuel efficiency.
The Generation II loaders integrate a LeTourneau SR brushless generator connected to the diesel engine and a set of four LeTourneau SR traction motors with double-reduction planetary mounted within the rim of each tire, water-cooled power electronics, and the proprietary LINCS II IGBT control system. The energy is recovered through the flywheel effect of the drive train (engine rotation, generator rotor, driveline, pump drive gear box). As the loader brakes during the loading phase and before loading the truck, energy normally lost is stored and used to hoist, dump and steer the machine.
LeTourneau said that over the previous year, two Generation II L-1150 loaders had operated at mine sites in the western United States and Australia, and the decision to move to commercial production was based on the experience gathered from monitoring these machines. The company said it had received 11 orders for Generation II L-1150 loaders in the three months prior to the announcement. With a standard bucket capacity of 25 yd3 (19.11 m3) and operating payload of 76,000 lb (34,473 kg), the L-1150 is designed to match 150- to 200-ton-capacity haul trucks. Generation II technology will be available on all of LeTourneau’s five loaders and dozers, including the L-2350, by the end of 2011.
DoJ Signs Off on Cat’s Bucyrus Acquisition
Caterpillar and Bucyrus International announced in late May they received notification from the U.S. Department of Justice (DoJ) it has closed its investigation into Caterpillar’s planned acquisition of Bucyrus (see E&MJ, December 2010, p. 108, Cat Adding Bucyrus to its Product Payload for $8.6B).
According to a statement issued by Cat, the DoJ action, in addition to the expiration of the Hart-Scott-Rodino Act waiting period, concludes the antitrust review process in the United States. The clearance by the DoJ will allow the acquisition, valued at approximately $8.6 billion (including net debt), to proceed as soon as all other conditions to closing have been satisfied. The transaction is expected to close in mid-2011.
At the time the acquisition plans were announced last year, Caterpillar said it intended to maintain the Bucyrus brand for the principal Bucyrus legacy products, which include rope shovel, dragline and underground mining equipment, and will relocate its Global Mining division offices to the Milwaukee, Wisconsin area, where Bucyrus is headquartered.
Caterpillar said it will fund the acquisition through a combination of cash from its balance sheet and debt, and does not plan to issue equity to help pay for the acquisition.
Mincom to Join ABB Group
Power and automation technology group ABB announced it will acquire Brisbane, Australia-based Mincom to broaden its software portfolio and establish a position as a major supplier of enterprise asset management (EAM) software and services.
ABB is acquiring the company from Francisco Partners, a private equity group that invests in technology businesses, for an undisclosed sum. The transaction is subject to customary regulatory approvals.
Mincom, which markets a comprehensive range of products for applications such as EAM, mining operations and mobile workforce management, has nearly 1,000 employees and annual revenues of approximately $200 million. With a distribution network in 19 countries, the company is well positioned in the Asia-Pacific and Latin America regions, with customers including 17 of the top 20 global mining groups, as well as businesses in the energy sector, defense and other asset-intensive industries.
“The acquisition of Mincom is part of our strategy to continuously broaden our software offering,” said Joe Hogan, CEO of ABB. “Mincom helps us to increase the depth of our enterprise asset management offering, building our position as a leader in the key growth sectors of natural resources and energy. For our customers this means extending the life of their infrastructure, optimizing asset management and reducing the overall cost of ownership.”
To ensure continuity for customers, ABB will retain the Mincom management team and its operations will be added to Ventyx, ABB’s dedicated software business.
The Ventyx portfolio combines information and operational technologies (IT and OT) to optimize asset performance, integrate business processes and deliver insight into global business operations. Mincom said its strong presence in the natural resources sector is complementary to ABB’s expertise in mining control systems and its leading position in energy management technology.
“Joining forces with ABB is a logical next step in the development of our company and a strong validation of the business, our people and our products,” said Greg Clark, CEO of Mincom. “It will expand our global reach and service capabilities, enabling us to continue building on the business we have fostered over the past three decades.”
The ABB Group of companies operates in about 100 countries and employs approximately 124,000 workers.