Terex
Corp. has signed a definitive agreement to sell its mining business to Bucyrus
International Inc. for $1.3 billion in cash. The products to be divested by
Terex in the transaction include hydraulic mining excavators, electric drive
mining trucks, track and rotary blasthole drills, and the highwall miner, as
well as the related parts and aftermarket service businesses, including the
company-owned distribution locations. The transaction, which is subject to
customary regulatory approvals, is expected to close in the first quarter of
2010.
“This
transaction accelerates the transformation of Terex Corp. as we move from a construction
and mining equipment company to a machinery and industrial products business,” says
Ronald DeFeo, Terex chairman and chief executive officer. “Going forward, we
will focus on products and services where we can maintain and build superior
customer propositions with high returns on capital for our owners. The current
environment plus this transaction provide an excellent opportunity to create
value. We plan to execute the changes needed to make this happen.”
DeFeo
emphasizes, “The sale of Mining to Bucyrus is good for customers, team members
and shareholders. It is a classic proposition that strengthens the mining
business for its customers and team members. For Terex, the attractive cash
offer provides us excellent financial flexibility, as our cash balance will
substantially equal our outstanding indebtedness. The approximately $1 billion
of after-tax proceeds will allow Terex to invest in its current, high
return-on-capital businesses, or to look to add new, well-positioned niche
manufacturers with strong market presence to the company’s portfolio.
DeFeo continues, “Mining is
a highly capital intensive business. 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.
We are confident that both companies’ stakeholders will benefit from the
transaction, with our mining customers being the ultimate beneficiaries. The
journey to make this a great business will accelerate under the leadership of
Bucyrus, which has a historically strong presence in surface mining with its
rope shovel and dragline products.”