Jim Cramer -- Joy Global Takeover Is 'Remarkable'
"I was shocked," TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said about the news that Joy Global (JOY) is being acquired.
The company is being purchased for $2.9 billion by Japan-based Komatsu (KMTUY) , Cramer said on CNBC's "Mad Dash" segment Thursday. Now Joy Global's stock rally makes a little more sense, Cramer said. Why else would shares rally from $8.35 earlier this year to more than $20 when coal is doing so badly.
The $28.30 purchase price represents a 48% premium to the stock's weighted 90-day average price and a 20% premium to Wednesday's close. The valuation of the deal is somewhat high, especially for a company that mainly produces mining equipment for coal, he added.
However, one overlooked portion of Joy's business is its maintenance unit. The company has a "fabulous book of business" in maintenance that has supported Joy for a long time and is very well run, Cramer said.
"This is a remarkable deal," and the second noteworthy one this week from Japan following SoftBank's (SFTBY) acquisition of ARM Holdings (ARMH) for $32 billion, Cramer concluded.
At the time of publication, Cramer's Action Alerts PLUS had no position in companies mentioned.