(JOYG) Joy Global Buys Rowan’s LeTourneau

Mining equipment maker Joy Global Inc. (JOYG) said it has acquired LeTourneau Technologies Inc. from Rowan Companies Inc. (RDC) for $1.1 billion in cash. The company had agreed to buy Rowan’s LeTourneau assets in May 2011.

LeTourneau remains engaged in the manufacturing of large wheel loaders for surface mining along with designing and construction of jackup rigs and shallow-water drilling vessels. Notably, it is a major manufacturer of drilling equipment for large land and offshore rigs and specialty steel products. The unit generated $815 million in revenue last year, with $556 million from its drilling products business and $259 million from mining.

The LeTourneau acquisition adds two very strong business platforms for Joy Global. Joy Global expects LeTourneau’s wheel loaders, which are the largest and most fuel efficient in the industry, and their complementary application to Joy’s electric mining shovels to deliver significant synergies.

Additionally, the company expects to gain from LeTourneau’s oil and gas drilling rig equipment and design business, which is leveraged to an emerging demand for higher specification rigs.

Mining equipment manufacturer and service provider Joy Global Inc. is based in Milwaukee, Wisconsin. The company caters to consumers all around the world and provides manufacturing, distributing and servicing equipment for surface mining, through its P&H Mining Equipment division, underground mining, through its Joy Mining Machinery division and bulk material conveyor systems, through its Continental Crushing & Conveying division.

Joy Global currently retains a Zacks #2 Rank (short-term Buy rating). We maintain our long-term Outperform rating on the stock. Joy Global competes head-to-head with the industry behemoth Caterpillar Inc. (CAT), which currently has a Zacks #1 Rank (short-term Strong Buy rating).

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ROWAN COS INC (RDC): Free Stock Analysis Report

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