Caterpillar to buy Electro-Motive Diesel for $820 million

The world's biggest manufacturer of construction and heavy equipment Caterpillar Inc yesterday agreed to acquire Electro-Motive Diesel (EMD), a maker of railroad locomotives for $820 million in cash in order to expand its rail and transit business.

Privately-owned EMD, founded in 1922, was formerly the electromotive division of General Motors.It designs, manufactures and sells diesel-electric locomotives and diesel power engines worldwide and is the world's largest builder of diesel-electric locomotives for commute and industrial use.

With 2009 turnover of $1.8 billion, EMD is the only diesel-electric locomotive manufacturer to have produced more than 70,000 engines and has the largest installed base of diesel-electric locomotives in both North America and globally.

It has joint venture partnerships with the China as well as with the Indian Railways, with whom its association started in 1959 when the LaGrange, Illinois-based maker of the world renowned Caterpillar tractor signed a contract to supply 127 diesel locomotives.

EMD then signed a transfer of technology agreement with Indian Railways in 1995 for it start manufacturing the passenger and freight version of the microprocessor- controlled 4000 HP diesel locomotives utilising EMD technology.

Peoria, Illinois-based Caterpillar, a Fortune 500 Company is buying EMD through its subsidiary Progress Rail Services for $820 million in cash from private equity firms Berkshire Partners LLC and Greenbriar Equity Group LLC.