Hong Kong/New York: Mining equipment maker Joy Global Inc is in talks to buy China’s International Mining Machinery Holdings Ltd, a maker of coal-mining equipment, a source familiar with the matter told Reuters on Thursday.
International Mining shares were suspended from trading on Monday in Hong Kong. The company, controlled by private equity firm Jordan Co LP, has a market value of HK$8.5 billion, or about $1.1 billion, according to Reuters data.
Joy Global could not be reached for comment, while International Mining declined comment. The source declined to be identified as the discussions were private. Bloomberg first reported the story.
A deal would make strategic sense, partly because it would keep Caterpillar Inc from gaining further scale in China, Baird Equity Research analyst Robert McCarthy said in a note to clients. China is the world’s largest coal mining market, three times the size of the US market.
In May, Joy Global said it would buy Rowan Companies Inc’s drilling and mining gear unit for $1.1 billion in cash as it looked to offset competition in its main market by entering the oil and gas drilling business.
Joy Global’s expansion into a new market follows Caterpillar’s $7.6 billion purchase of main rival Bucyrus -- a deal that leaves Joy Global as the last stand-alone United States-based maker of mining equipment.
Caterpillar completed the Bucyrus deal this week.
If it won control of International Mining, Joy Global could add 40 cents per share to fiscal 2012 earnings, McCarthy said. Joy Global is forecast to earn $7.24 per share next year, according to Thomson Reuters I/B/E/S.
Joy Global shares rose 1.2% to $95.35 in afternoon trading on the Nasdaq. Caterpillar added 1.6% to $108.64.