Caterpillar to expand mining business with Bucyrus acquisition

  • 24-Nov-2010 02:50 EST

Caterpillar Inc. and Bucyrus International Inc. have entered into an agreement under which Caterpillar will acquire Bucyrus in a transaction valued at approximately $8.6 billion (including net debt). The acquisition is part of Caterpillar’s strategy to expand its mining equipment business. Caterpillar intends to locate its mining business headquarters in South Milwaukee, WI, where Bucyrus headquarters is currently located, and maintain the Bucyrus brand for principal legacy products. The transaction, which has been approved by the boards of directors of both companies, is expected to close in mid-2011. At that time, Caterpillar Group President Steve Wunning will be accountable for Bucyrus, along with his current responsibilities for the company’s mining business. Caterpillar estimates more than $400 million in annual synergies beginning in 2015 derived from the combined financial strength and complementary product offerings of the combined mining equipment businesses. Synergies driven by the acquisition include Caterpillar Remanufacturing products and services for Bucyrus equipment, Cat engines and components to enhance performance and lower owning and operating costs for Bucyrus equipment, and additional scale and cost efficiencies in areas such as purchasing and engineering.

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