Japanese construction-gear maker Komatsu (KMTUY) said on Thursday it agreed to pay just under $2.9 billion for Milwaukee-based Joy Global (JOY) in a bet on long-term growth in the mining equipment sector.

Komatsu said it would pay $28.30 per Joy Global share, which is 20% more than the target's $23.55 closing price on Wednesday. Including debt the offer is worth $3.7 billion.

The Tokyo acquirer said the purchase reflects a recently launched three-year plan to strengthen its mining equipment business, where it lacks underground mining gear, in order to secure sustainable growth.

"Demand for mining equipment has declined dramatically from the peak, reflecting economic slowdown in emerging countries and low commodity prices. Over the long term, however, the mining equipment business is projected to grow, driven by population growth and rapid urbanization around the world," said Komatsu, which is led by president and CEO Tetsuji Ohashi.

The Japanese company pounced on Joy Global at a time when its shares are down almost 18% on the year. The target since mid-January has been steadily rising from lows of under $9 on bid expectations, though takeover interest for Joy and similarly beleaguered U.S. industrial companies was seen more likely to come from China, which recently overtook the U.S. as the largest outbound acquirer, than Japan.

The takeover may buoy bid hopes for other industrial companies, including cranes maker Manitowoc (MTW - Get Report) . In London mining and construction equipment maker Weir was up 2.7% in early trading on Thursday.

Joy Global, led by president and CEO Ted Doheny, had sales of $3.17 billion last year and made a net loss of $1.2 billion.

In a statement Doheny called the deal a "compelling transaction which delivers substantial and certain value to our stockholders as well as expanded options for our customers and employees going forward."

Komatsu will keep its target's headquarters and brand. Joy Global employs 12,000 and it wasn't immediately clear if the acquirer will preserve all jobs. The Japanese group employs 47,000.

Komatsu, which had a market value of ¥2 trillion ($18.7 billion) as of Thursdays' close, derived ¥450 billion of sales from mining equipment in its last financial year.

Komatsu plans to finance the acquisition through funds on hand and bank loans and said it does not expect to issue new shares.

The Komatsu offer is structured as a so-called reverse triangular merger between Joy Global and a wholly owned subsidiary that the Japanese group has established to buy Joy Global.

Joy Global will be the surviving company and the shares of the Komatsu bid vehicle will be converted into outstanding shares of the surviving company, making that entity a wholly owned unit of Komatsu.

Joy Global said on Wednesday it would sell its steel plate mill in Longview, Texas, to Nucor (NUE - Get Report) for about $29 million.