Caterpillar to acquire mining equipment maker Bucyrus for $8.6 billion
15 November 2010
Caterpillar Inc, the world's largest construction and mining equipment maker, today said that it would pay about $8.6 billion in cash to buy Bucyrus International Inc, including its debt to expand its range of mining equipment.
South Milwaukee, Wisconsin-based Bucyrus designs and manufactures high productivity mining equipment for the surface and underground mining industries.
Bucyrus' surface mining equipment is used for mining coal, copper, iron ore, oil sands and other minerals. Its underground mining equipment is used primarily for mining coal and also used in mining minerals such as potash and trona.
In addition to machine manufacturing, Bucyrus manufactures high quality original equiment parts and reported 2009 revenues of $2.7 billion and a net profit of $312.7 million.
Under the terms of the transaction, which has been approved by the boards of directors of both companies, Bucyrus shareholders will receive $92 per share, or $7.6 billion in cash, representing a premium of 32 per cent to Bucyrus' share price on 12 November 2010.
Caterpillar said that it will fund the acquisition through a combination of cash from the balance sheet, debt and up to $2billion in equity. The transaction is expected to close in mid-2011.
Caterpillar will locate its mining business headquarters in South Milwaukee, where Bucyrus headquarters is currently located, and maintain the Bucyrus brand.
With 2009 sales and revenues of $32.396 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.
The acquisition will help Caterpillar to expand its leadership in the mining equipment industry, and positions it to capitalise on the promising long-term outlook for commodities driven by rapid growth in emerging markets.
''For several years, mining customers have been asking us to expand our range of products and services to better serve their increasingly complex requirements,'' said Caterpillar chairman and CEO, Doug Oberhelman.
''This announcement says to those customers, we heard you loud and clear. It is a strong statement about our belief in the bright future of the mining industry. Our strategy calls for disciplined investment in attractive industries that value our product and service delivery model," he added.
''Even today at mine sites around the world, our customers are using Bucyrus shovels to load Caterpillar mining trucks,'' said Tim Sullivan, Bucyrus president and CEO. ''This combination, as well as the significant expansion in products and facility capacity already announced, gives us the opportunity to expand the range of surface and underground mining products and solutions offered to customers by Caterpillar and its dealer network.''
For Caterpillar, this will be the third acquisition this year after it acquired Electro-Motive Diesel (EMD), a maker of railroad locomotives for $820 million in cash in May in order to expand its rail and transit business and German engine maker Motoren-Werke Mannheim Holding (MWM), from private equity firm 3i in October for $810 million.