Terex Takes Leading Stake In Bucyrus After Equipment Sale

Terex Corp. (TEX) on Friday became the largest shareholder in Bucyrus International Inc. (BUCY) as it completed the sale of its mining equipment business to Bucyrus in a cash and stock deal worth $1.3 billion.

Terex received 5.8 million shares of Bucyrus stock, placing it ahead of investment management firm Neuberger Berman LLC, which had 5.5 million shares, or 7.3% of the total shares, as of Dec. 31.

Terex, which also received $1 billion in cash from Bucyrus, said it views the stock as an investment and has no immediate plans for its shares. The Connecticut-based construction equipment maker, however, expects to plow the cash proceeds from the deal into acquisitions intended to position the company for better sales and profit growth. Terex's sales in 2009 plunged 52% from 2008 as demand for construction equipment slumped in the weak global economy.

"Our focus going forward is on product and market niches where we can maintain and build superior customer propositions with high returns on capital for our shareholders," said Chairman and Chief Executive Ron DeFeo in a written statement.

Mining equipment company Bucyrus, meanwhile, receives Terex's hydraulic excavators, electric-drive mining trucks, self-propelled blasthole drills and highwall miners. The mining equipment line has been one of Terex's best-performing segments in recent years, with net sales of $1 billion a year.

The deal will increase Bucyrus' annual revenue to about $3.8 billion, pulling it roughly equal in revenue with its hometown rival Joy Global Inc. (JOYG). More importantly, perhaps, the purchase puts Bucyrus in some different equipment markets from Joy Global. The two Milwaukee, Wisc., companies traditionally have competed toe-to-toe in longwall machinery and dragline equipment.

Rebounding prices for copper, iron ore and other mined commodities are boosting demand for Bucyrus' mining machinery and parts. The company on Friday reported a 23.9% increase in fourth-quarter profit.

"We think we're in for a good 2010," Bucyrus Chief Executive Tim Sullivan said during a conference call with Wall Street analysts. "The market is strong and I think we're particularly excited about the Terex acquisition and getting that closed and moving forward."

Bucyrus' stock ended Friday's regular session down 0.38%, or 24 cents, at $62.64 a share. Terex, meanwhile, closed up 4.16%, or 82 cents, at $20.54 a share.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

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