Joy Global Sells Drilling Business
Joy Global Inc. announced it has entered into a definitive agreement to sell the drilling products business of its recently acquired subsidiary, LeTourneau Technologies, Inc. Cameron International Corp. will acquire the business for $375 million in cash, subject to certain post-closing adjustments. The transaction has been approved by both companies’ boards of directors.
Completion of the transaction is subject to necessary regulatory approvals and other customary closing conditions and is expected to occur within 60 days. Drilling Products had calendar 2010 revenue and adjusted earnings of $515 million and $32.2 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 manufacturer of drilling equipment for large land and offshore rigs. The LeTourneau facilities in Houston, Texas and Vicksburg, Miss., will be part of the transaction while the Longview, Texas, facility will remain with Joy Global.
Steel products are not included in this transaction and will be reported through the P&H surface mining equipment business. The parties will also enter into a Transition Manufacturing and Supply Agreement and Steel Supply Agreement. The Transition Manufacturing and Supply Agreement will allow for the orderly transfer of Drilling Products work from the Longview facility to Cameron and the Steel Supply Agreement will allow Cameron time to develop other sources.
“We closed on the LeTourneau acquisition in late June, and today announce the sale of the drilling products business to Cameron International,” said Mike Sutherlin, Joy’s president and CEO. “For Joy Global, the divestiture enables us to focus on our core mission of mining equipment and the proceeds will expand our funding options to complete the acquisition of International Mining Machinery Holdings Ltd (IMM)."