As discussed in the previous post, Caterpillar Inc. has agreed to purchase Bucyrus International Inc. for $7.6 billion. The deal must still be approved by regulatory agencies. The world’s mining equipment makers have been consolidating at a fast rate and the latest deal will speed the trend.
According to The Wall Street Journal, Caterpillar has already acquired two other companies this year: a manufacturer of railroad locomotives and a maker of engines. Bucyrus acquired the mining-equipment division of Terex Corp.
According to the WSJ, Caterpillar will use debt and $2 billion from a sale of its shares to partly finance the acquisition of Bucyrus. The companies plan to close the deal by the middle of next year. The deal will be the largest for Caterpillar.
Bucyrus makes equipment to mine coal, iron ore, copper, oil sands and other minerals. Bucyrus manufacturing facilities are located in South Milwaukee, Houston and Germany. Caterpillar is based in Peoria, Illinois.
Caterpillar and Bucyrus each manufacture different equipment, so the acquisition will raise profits and bring down prices for customers. The companies say that the consolidation is not only good for their customers, but is exactly what their customers want. Instead of buying shovels from Bucyrus and mining trucks from Caterpillar, they can get them in one place.
Caterpillar to Buy Bucyrus (The Wall Street Journal)