Joy Global Inc. (JOYG) intends to purchase mining equipment manufacturer LeTourneau Technologies Inc. from Rowan Cos. (RDC) for $1.1 billion, as Joy Global moves to counter Caterpillar Inc.'s (CAT) acquisition of rival Bucyrus International Inc. (BUCY)

Joy Global's acquisition of LeTourneau will give the Milwaukee company exposure to oil and gas drilling equipment and will expand Joy's line of high-horsepower wheel loaders. LeTourneau specializes in giant electric-drive wheel loaders for surface mines.

"I believe LeTourneau is a high-quality business at a good value," said Chief Executive Mike Sutherlin during a conference call Monday. "We can add substantial value to LeTourneau's drilling business. We also know the LeTourneau mining business very well."

Joy Global already distributes LeTourneau mining equipment in some markets. Sutherlin said he expects the business to be accretive to Joy Global's earnings in the first year after the deal is completed and predicted that Joy Global will achieve $40 million in cost reduction synergies by 2013. LeTourneau reported revenue of $815 million in 2010 and pre-tax income of $105 million.

Caterpillar's $7.6 billion deal for Bucyrus International late last year put pressure on Joy Global to make a move as the only remaining pure-play company in the surface- and underground-mining equipment market. Caterpillar, the world's largest maker of construction equipment by sales, is widely seen as having a size advantage over Joy Global once its purchase of Bucyrus is completed later this year.

By acquiring LeTourneau, Joy Global will be able to pivot into the oil and gas industry as well as fortify its mining equipment business, particularly for mines sites in remote locations that rely on the big wheel loaders because they lack electricity to power electric mining shovels.

"This fits very strategically with our business," Sutherlin said. "It's going to give us some great opportunities. We see ourselves as a business that understands the resource extraction business very well."

Orders for mining equipment has been improved in recent quarters as higher prices for commodities such as copper and coal provide an incentive for mine operators to revive expansion projects and plans for new mine sites shelved in late 2008 when demand and prices collapsed.

Rowan planned to sell or spin off its LeTourneau manufacturing operations when market conditions became favorable. Rowan's first-quarter earnings fell 50% due in part to delayed shipments at LeTourneau and one-time costs in its offshore drilling business.

Joy Global's stock was recently trading up 1.7% at $89. Rowan was up 2% at $38.80.

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

--Lauren Pollock contributed to this report.

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