MILWAUKEE, WI (May 16, 2011) Joy Global Inc. (NASDAQ:JOYG), a worldwide manufacturer of mining equipment, today announced that it has entered into a definitive agreement to acquire a 100% ownership interest in LeTourneau Technologies Inc. from Rowan Companies Inc. (NYSE: RDC) for $1.1 billion in cash. LeTourneau designs, builds and supports equipment for the mining and oil and gas drilling industries, and has manufactured earthmoving equipment since the 1920s. The transaction has been approved by both companies' boards of directors. Completion of the transaction is subject to the receipt of necessary regulatory approvals and other customary closing conditions and is expected to occur within 60 days.
LeTourneau operates two business segments — mining products and drilling products. The mining products business is the world's leading manufacturer of large wheel loaders for surface mining, providing the industry's largest model sizes and payload capacities. LeTourneau's mining products business had calendar 2010 revenue and EBITDA (see LeTourneau's Adjusted EBITDA Reconciliation) of $259 million and $67 million, respectively.
LeTourneau's drilling products business is a designer of offshore jack-up drilling rigs as well as a manufacturer of the primary components for these rigs. It is also a major manufacturer of drilling equipment for large land and offshore rigs and of specialty steel products. LeTourneau's drilling products business had calendar 2010 revenue and Adjusted EBITDA of $556 million and $38 million, respectively.
"This acquisition represents a compelling opportunity for Joy Global Inc. and our shareholders, with strong growth prospects for both the mining products and drilling products business segments," said President and Chief Executive Officer Mike Sutherlin. "The LeTourneau mining products business is a natural fit with our P&H business. It adds another solution for surface loading that complements our electric mining shovels, and gives us access to smaller and non-electrified mines. The drilling products business moves us into another area of resource extraction that has similar fundamentals and value drivers as surface and underground mining, and therefore is a good fit for our business model which focuses on equipment reliability and Life Cycle Management. Oil and gas has been defined as a strategic growth opportunity for a number of years, and LeTourneau gives us a great entry point into this sector. We welcome the LeTourneau team to Joy Global Inc. and look forward to working together to pursue the growth opportunities that come with the combined business."
LeTourneau is well positioned to grow its mining business as mine expansion continues. It is the only manufacturer of electric drive loaders and has the broadest range and largest sizes of wheel loaders in the mining industry. These are the only wheel loaders with installed power greater than 2,000 gross horse power rating, and the only wheel loaders capable of loading 400-ton haul trucks. LeTourneau's mining products business will be integrated with Joy Global Inc.'s P&H Mining Equipment business.
Randy Baker, President and COO of P&H Mining Equipment said, "The addition of LeTourneau's front-end loaders will enhance our product offering and leverage our existing manufacturing and product distribution networks. We expect a smooth integration since P&H already serves as a dealer for LeTourneau in key geographies around the world. In addition, LeTourneau's electric drive technology is more efficient than mechanical drive systems, which has resulted in strong order growth. We believe that the LeTourneau business gives us the opportunity to further build on our Life Cycle Management strategy by adding a complementary product range that brings volume and scope to our aftermarket business. We intend to use this acquisition to more efficiently provide our customers with better service levels. As a result, we will look for ways to integrate the LeTourneau and P&H field facilities and distribution activities."