Bucyrus has agreed to acquire Terex Corporation’s mining equipment business for $1.3bn.
The acquisition includes Terex’s subsidiaries and assets used to design, produce and sell hydraulic excavators, surface mining trucks, drills, highwall miners and associated parts and after-sales service.
This acquisition will have a major impact on the mining equipment sector, according to analysts, and will allow Terex to focus more on production of equipment for other sectors including aerial work platforms and backhoes for the construction sector.
The acquisition will also put Bucyrus in a strong position to compete with other equipment manufacturers such as Caterpillar and Deere.
The deal, which will increase Bucyrus’ addressable market from $15bn to $30bn, is dependent on certain regulatory approvals and other closing conditions and is likely to be completed in the first quarter of 2010.
The deal comes at a time when the mining sector is trying to find ways to increase the life of existing mining equipment, especially in the area of heavy mining equipment, which is becoming even more difficult to procure, according to a study by PriceWaterhouseCoopers.
Worldwide demand for specialised mining machinery and equipment is expected to rise to 5.9% per annum through 2011 to $33.6bn because of constant demand for copper, iron ore and other commodities, according to a report by The Freedonia Group.