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Cameron to buy LeTourneau drilling business from Joy in $375m deal

Published: 23:44 31 Aug 2011 AEST

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Cameron International Corp (NYSE:CAM), a provider of flow equipment to the oil and gas industry, said on Wednesday it plans to buy the LeTourneau Technologies drilling business from Joy Global (NASDAQ:JOYG) for $375 million cash.

LeTourneau provides drilling equipment and rig designs, as well as components for both the land and offshore rig markets. The company’s products include elevating systems, mud pumps, rig control and power systems.

The deal, which has been approved by both companies' boards, is subject to closing conditions and is expected to close in the next two months.  Cameron said it anticipates the acquisition will add to earnings in 2012.

"The addition of LeTourneau's portfolio of drilling equipment and rig components adds to our existing products offering and enhances the growth opportunities for our drilling systems platform", said CEO of Cameron, Jack Moore.

In May, Joy acquired Le Tourneau from Rowan Companies (NYSE: RDC) for $1.1 billion. Joy said in a separate statement that with the divestiture, it plans to focus on its core mining equipment business.

Credit Suisse advised Cameron, while Bank of America Merrill Lynch acted as financial advisor for Joy.

Cameron’s shares were inactive during pre-market trade. Its shares closed at $51.89 Tuesday on the New York Stock Exchange.

However, Joy Global’s shares shot up 4.19% to $86 in pre-market trade as its profits surged 49% in the third-quarter to $173.1 million, or $1.62 per share. Analysts expected earnings of $1.53 per share.

Indeed, the company's strong third quarter led it to boost its full year outlook for the third time. It now expects earnings of between $5.70 and $6.00 per share, with revenues in the range of $4.3 to $4.5 billion, up from its previous estimate of between $4.1 billion and $4.3 billion in sales, and $5.30 and $5.60 in earnings per share.

Meanwhile, revenues rose 33.7% to $1.14 billion, as sales from the company's underground mining machines rose 31%, while sales from surface mining equipment shot up 36%.

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