Mergers and Acquisitions

Bucyrus to acquire mining equipment business of Terex Corp.

South Milwaukee-based Bucyrus International Inc. has reached terms to acquire the mining equipment business of Terex Corp. for $1.3 billion in cash.

The transaction, expected to close by the end of February, will create the world’s largest supplier of mining equipment, and is likely to create 400 to 500 new jobs in metro Milwaukee in the next several years. The company currently has about 1,500 employees in southeastern Wisconsin.

"We are extremely excited about acquiring Terex Mining and we believe that this is a unique opportunity to build an even stronger company for our customers, employees and shareholders," said Tim Sullivan, chief executive officer of Bucyrus. "Customers will reap benefits from this transaction as Bucyrus will be able to offer a broad, complementary product line that is driven by technology, quality, and first class service.”

With the acquisition of Terex’s mining equipment, Bucyrus will offer a comprehensive product portfolio comprised of walking draglines, electric rope shovels, hydraulic excavators, off-the-highway haul trucks, highwall miners, underground longwall, room and pillar and transport machinery and a full line of drills and belt systems for all mining applications.

"Like Bucyrus, the Terex mining assets have a proud history powered by hard-working, loyal employees who are passionate about mining,” Sullivan said. “This broad product line and our infrastructure around the world will be met with positive reaction by our customer base around the world. We have positioned ourselves to do business with some of the big multinationals as well as some of the smaller applications where Terex has had success in the last decade.”

Terex’s mining equipment business has 38 facilities around the world with approximately 2,150 employees. After the acquisition, Bucyrus will have approximately 10,000 employees in nearly 100 locations around the world.

The company will have also greatly increased its market share – from Bucyrus’ current addressable market of $15 billion to about $30 billion.

“This will (make) us the largest mining equipment supplier in the world today,” Sullivan said.

The global company will also achieve roughly $100 million in annual savings, to be worked in over the next year or two. It expects to save roughly $28 million on manufacturing and distribution, approximately $33 billion in the supply chain and $24 million in overhead.

While Bucyrus will achieve significant cost savings with the acquisition, it expects to add 400 to 500 employees in the Milwaukee area in the next two to three years, Sullivan said. About half of the new jobs will be in manufacturing, with the balance in engineering and management positions.

Bucyrus’ facility in South Milwaukee is the company’s global headquarters, and Terex’s mining division management will be housed there in the future, Sullivan said. The company is now negotiating to bring many of Terex’s managers to the metro area.

“We will go through the entire (negotiation and evaluation) process over the next few weeks,” he said. “We value the people at Terex. The people we have met there are top notch.”

Bucyrus has entered into a commitment letter with a group of financial institutions to provide funding necessary for the acquisition through an increase in its existing revolving credit facility and a new term loan facility. The commitment letter also provides for modification of certain terms of the Company’s existing debt.

Greenhill & Co. LLC acted as financial advisor to Bucyrus with respect to the acquisition agreement and commitment letter. Sullivan & Cromwell LLP acted as counsel to Bucyrus in connection with the acquisition agreement, and Foley & Lardner LLP acted as counsel to Bucyrus in connection with the commitment letter.

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