TJCC Holdings, a unit of private equity firm Jordan, has conditionally agreed to sell 534.8 million shares of IMM to Joy for $HK8.50 per share, a 30% premium over its last share price on July 11.
Once the initial share purchase agreement is completed, Joy Global will be required by Hong Kong regulations to make an offer for IMM’s remaining 59%.
The tender offer will be introduced by Joy’s wholly owned Hong Kong subsidiary Newco Hong Kong 123 and will be subject to approval by the Hong Kong Securities and Futures Commission.
Joy said the transactions would be financed by a combination of cash on hand, borrowings and cash raised through an equity offering, with the final mix hinging on the number of shares tendered and the amount of cash on hand.
While Joy did not indicate an expected closing date, it did note that completion was subject to necessary approval from the Anti-monopoly Bureau of the Ministry of Commerce of the People's Republic of China as well as other customary closing conditions.
“A core part of our business strategy has been to position ourselves for the high growth of the emerging markets, and the investment in IMM is a major step in the execution of that strategy," Joy president and chief executive officer Mike Sutherlin said.
“The China coal market is large and diverse and must be accessed with a multi-dimensional strategy. While the major mines generally use globally sourced equipment, a larger number of mines rely on local Chinese mining equipment manufacturers.
As such, he added, leadership in the Chinese market required strong positions that are specific to each segment.
In the case of IMM, it is an established market leader in the local market with products for longwall shearing machines and road headers.
“IMM is a very strong complement to our Joy Mining and P&H businesses, and gives us leading positions in each of the major segments of the China market," Sutherlin said.
UBS AG and Goldman Sachs (Asia) are serving as financial advisors to Joy Global on this transaction, and Allen & Overy are serving as legal advisors.
Joy Global just completed its $1.1 billion buyout of surface OEM LeTourneau Technologies on June 22.
