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Komatsu America has signed an agreement to acquire the US-based surface and underground mining equipment manufacturer Joy Global for $3.7bn.

Komatsu said that the acquisition is in line with the company’s strategy to strengthen its core mining equipment business.

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Joy Global manufactures and services equipment and parts for underground and surface mining applications.

"The mining industry continues to face cyclical headwinds from oversupplied commodities and reduced end user demand."

Komatsu, which has been engaged in the mining equipment business since 1921, was expanded in the 1990s with the acquisition of selected mining equipment manufacturing and distribution businesses in various mining regions.

The agreement will see the integration of Joy Global and Komatsu's product lines and, also expands options for global customers.

Komatsu will now be able to offer underground mining equipment and large-sized loading equipment, as well as continuing to offer Dantotsu products to its customers in both surface mining and underground mining businesses.

Joy Global president and CEO Ted Doheny said: “The mining industry continues to face cyclical headwinds from oversupplied commodities and reduced end user demand resulting in cash flow restrictions for most producers, creating an increasingly challenging environment.

“We are also seeing structural changes in the US and China coal industry.”

The acquisition of Joy Global will add to the company’s lineup of surface mining equipment, including rope shovels, super large wheel loaders, draglines, and drills to Komatsu’s portfolio.

After completion of the acquisition, Joy Global will become a consolidated subsidiary of Komatsu, and the companies will work together to align the organisation and operation to better support their customers.

The acquisition, which is subject to the approval of Joy Global shareholders and the receipt of necessary regulatory approvals, is expected to close next year.

Image: The agreement will integrate Joy Global and Komatsu's product lines. Photo: courtesy of Joy Global Inc.