Mining OEM equipment maker Joy Global Inc yesterday said that it will buy 41 per cent of China's International Mining Machinery Holdings Ltd (IMM), a maker of coal-mining equipment, for $585 million.

Milwaukee, Wisconsin-based Joy Global will buy 41 per cent of Hong Kong-listed IMM at HKD 8.50 per share from TJCC Holdings Limited, a unit of New York-based private equity firm The Jordan Company.

Since under Hong Kong law, buying 41 per cent will trigger a mandatory offer for the rest of the company, Joy Global will make an offer for the remaining 59 per cent of IMM once the share purchase agreement is completed.

Beijing-based IMM, which has a market value of about $1.09 billion, is a leading designer and manufacturer of underground longwall coal mining equipment in China. Its products include roadheaders, shearers, armoured-face conveyors and related products, and electric control systems.

Its end customers include all of the 50 largest coal producers in China, which collectively account for approximately 60 per cent of the total coal production in China. In August 2010, IMM completed the acquisition of Qingdao Tianxun Electric Co to become a leading provider of a complete longwall system solution in China.

In December 2010, IMM entered into a joint venture with Shanxi Coal Transportation and Sales Group Co in order to meet the enormous demand for coal mining machinery in the rapidly consolidating coal mining market in Shanxi.

IMM, which posted 2010 net income of $53.9 million on revenues of $299 million, secured a number of new international orders last year with the company shipping its first roadheader to Russia, its first overseas order, which was soon followed by other orders to India and Australia.

Based on International Mining's market value, a bid for the whole company would be the largest in the construction and mining machinery industry since Caterpillar's $8.61 billion takeover of Buycrus International last November, according to Bloomberg data.

Joy Global is looking to expand its mining product lines in order to enhance its product portfolio by developing technology in-house or by acquiring rival companies.

While the major mines in China generally use globally sourced equipment, a larger number of mines rely on local Chinese mining equipment manufacturers. IMM is an established market leader in the local market and its products is a very strong complement to Joy Mining' portfolio that will help the US mining equipment maker to have a strong position in each of the major segments of the Chinese market.

Joy Global manufactures and markets original equipment and aftermarket parts and services for both the underground and above-ground mining industries and certain industrial applications. Its products and related services are used extensively for the mining of coal, copper, iron ore, oil sands, gold and other mineral resources.

Its facilities and equipment service centers span six continents and more than twenty countries.

In June 2011, Joy Global acquired LeTourneau Technogies, the mining equipment and drilling systems business unit of Rowan Companies for $1.1 billion in order to add high-capacity LeTourneau front-end loaders for mining operations while giving Joy Global a foothold in the oil and gas drilling equipment market. LeTourneau accounted for 30 per cent of Rowan sales in 2010.

"A core part of our business strategy has been to position ourselves for the high growth of the emerging markets, and the investment in IMM is a major step in the execution of that strategy," said Mike Sutherlin, president and CEO of Joy Global.

The acquisition is subject to the approval China's Anti-Monopoly Bureau of the Ministry of Commerce.