Japanese manufacturer and world’s biggest maker of giant excavators— Hitachi Construction Machinery Co. has made a recommended A$689 million offer to acquire Bradken Ltd., Australia-based global manufacturer and supplier of mining equipment.
Last year, the Australian company rejected a A$428 million offer from Koch Industries Inc. and Pacific Equity Partners, saying that these offers did not reflect the fair value of the company.
Hitachi Construction Machinery has now offered A$3.25 per share to buy Bradken; which is a 34 percent premium over Bradken’s closing share price on Friday. The offer implies an equity value of $688 million and an enterprise value of (including debt) of $976 million.
Hitachi Construction Machinery’s majority shareholder (holding approximately 50%) is Hitachi Ltd, also separately listed on the Tokyo Stock Exchange. It is a leading global manufacturer and supplier of construction and mining machinery (such as hydraulic excavators, rigid dump trucks and wheel loaders), as well as machinery consumables and parts. Hitachi Construction Machinery is Japan’s second-biggest maker of construction and mining equipment, and it biggest global share of giant excavators used in mining.
Bradken is a global manufacturer and supplier of differentiated consumable and capital products to the mining, transport, general industrial and contract manufacturing markets. The company specializes in manufacturing fully machine
In what is seen as a supplement to its parts business for mining equipment and as an avenue to boost earnings, Hitachi Construction Machinery views this acquisition as highly profitable. The purchase is estimated to create synergies worth more than 20 billion yen ($197 million) in five to six years, Chief Executive Officer Yuichi Tsujimoto stated. The company foresees mid to long-term growth in the mining equipment business.
According to its statement, Hitachi Construction Machinery will start a tender offer for Bradken for six weeks from mid to late-October and will be utilizing funds on hand and bank borrowing to finance the acquisition.