SOUTH MILWAUKEE, Wis. (AP) -- Bucyrus International Inc. said it will buy Terex Corp.'s mining equipment division for $1.3 billion in cash, adding complementary services to its business and broadening its geographic reach.
The Terex unit makes hydraulic excavators, electric drive mining trucks, track and rotary blasthole drills and highwall mining systems. Bucyrus, a South Milwaukee, Wis., maker of mining equipment for surface and underground mining, said late Sunday that the acquisition will double its addressable market to more than $30 billion from about $15 billion.
Terex said the acquisition speeds up its plan to convert to a machinery and industrial products company from a construction and mining equipment business.
The Westport, Conn., can opt to receive $300 million of the purchase price in Bucyrus stock, based on its current trading price. Bucyrus has reached a deal with some lenders that will help it pay for the deal by increasing its existing credit agreement and obtaining a new term loan facility. The commitment letter with the lenders also allows Bucyrus to alter certain terms of its existing debt.
The transaction will boost Bucyrus' staff to about 10,000 employees in almost 100 worldwide locations. It is also expected to provide more than $100 million in annual run-rate savings for the company by 2012. Bucyrus said much of the savings will come from consolidating manufacturing plants, as well as through combining management functions and lowering purchasing expenses.
Both companies' boards have approved the deal, which is expected to close in the first quarter.