Bucyrus CEO: Terex Deal a Boon

(Updated to reflect closing stock prices and to add analyst comments.)

SOUTH MILWAUKEE, Wisc. (TheStreet) -- Investors applauded Bucyrus(BUCY) Monday after the company said its deal to acquire the mining-equipment segment of Terex(TEX) would boost its revenue by more than 50% and double the size of the market it's capable of selling machines to.

Bucyrus shares surged by as much as 11.7% Monday, touching a new 52-week high at $56.82, before easing back. The stock ended the regular session at $55.84, up 9.8%, or $5. Volume reached 7 million shares, more than double the daily average turnover of 2.7 million. Terex shares also shot higher, closing the day at $20.94, up $1.73, or 9%.

Bucyrus CEO Tim Sullivan told TheStreet Monday that the deal positions his company as a kind of one-stop shop for the huge diversified mining concerns, such as BHP Billiton(BHP), Rio Tinto(RTP) and Freeport McMoRan(FCX). "We can provide them with everything they need," Sullivan said. "This product portfolio becomes, without exception, the largest portfolio of mining machinery in the world. Already since this morning some of our largest customers have called and congratulated us."

On a separate Monday morning conference call to discuss the $1.3 billion acquisition, Sullivan and his top managers added texture to a deal that investors already viewed favorably.

During the call, executives said that, on a pro forma basis, revenue from the new business lines would boost the company's overall top line to about $3.9 billion from the $2.6 billion projected for 2009, all but guaranteeing an earnings lift in the first year that Bucyrus owns the former Terex unit.

Bucyrus executives didn't provide their own earnings forecasts, but one stock analyst covering the heavy-equipment industry, Paul Bodnar of Longbow Research, said Bucyrus could add 35 cents to 40 cents per share to its bottom line in 2010, if the acquisition closes by the end of the first quarter. Those figures exclude deal costs. Analysts have a consensus target for Bucyrus' 2010 EPS of $3.25.

Looking deeper in the future, Bodnar said the acquisition could add $1.75 to $2.00 per share to Bucyrus's earnings by 2013, taking into account debt servicing and synergies.