Bucyrus Intl To Buy Terex Biz For $1.3B

Mining equipment maker Bucyrus International Inc. agreed Sunday to buy Terex Corp.'s mining equipment business for $1.3 billion to take a global lead in the business.
Though the purchase is officially a cash deal, Bucyrus can at the closing request that $300 million of it be paid in Terex stock at the current share price.
The purchased assets include operations making hydraulic mining excavators and electric drive mining trucks and comprise 38 facilities around the world with about 2,150 employees. Once the deal closes, South Milwaukee, Wis.-based Bucyrus will operate out of about 100 locations around the world and have about 10,000 employees.
"Through our extended product offering, we will continue to design and produce world-class machines and provide the best after-market support throughout the life of the equipment," Bucyrus CEO Tim Sullivan said in a statement. "We will expand our geographic footprint and diversify our portfolio of products across a broader range of commodities."
Bucyrus estimated it could find more than $100 million in annual operating synergies by 2012 because of the deal.
Both boards have approved the deal, which does not need shareholder approval from either company. The parties expect to close the transaction in the first quarter of 2010.
Bucyrus said it has signed a commitment letter with a group of financial institutions, which it did not name, to provide financing for the deal by increasing its existing revolving credit facility and with a new term loan facility.
Westport, Conn.-based Terex said the sale is part of its plan to relinquish its construction and mining equipment business and focus on machinery and industrial products, which have a higher return on capital. The company will receive about $1 billion in net proceeds, which it plans to reinvest in its chosen core business.
"Mining is a highly capital intensive business," said Terex chairman and CEO Ronald M. DeFeo in a statement. "It would take us years to build the infrastructure to service and support new equipment sales in many of the key mining markets around the world where Bucyrus already has significant presence."
Goldman, Sachs & Co. acted as financial adviser to Terex on the deal, while the company sought legal counsel from Bryan Cave LLP.
Greenhill & Co. LLC served as Bucyrus' financial adviser. Sullivan & Cromwell LLP acted as counsel to Bucyrus in connection with the acquisition agreement, while Foley & Lardner LLP provided legal advice on a commitment letter from lenders.