DOW JONES NEWSWIRES
Caterpillar Inc. (CAT) said it will buy mining giant Bucyrus
International Inc. (BUCY) for about $7.6 billion as the
heavy-equipment giant looks to bolster its mining-equipment
production.
The deal comes as Caterpillar's fortunes have improved mightily
the past year as construction and mining companies replenish
equipment after cutting back in 2009.
Under the agreement, Caterpillar will pay $92 for each Bucyrus
shares--a 32% premium to Friday's closing price and an all-time
high for the stock. Including debt, the deal's value is $8.6
billion.
Caterpillar shares fell 1.4% to $79.92 in premarket action on
the news after rising 42% this year through Friday. Joy Global Inc.
(JOYG), which was eclipsed by Bucyrus as the world's biggest
mining-equipment maker following a recent acquisition by Bucyrus,
rose 9.8% to $79.48.
"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
Chief Executive Doug Oberhelman. "This announcement says to those
customers, we heard you loud and clear."
The deal, which expected to close in mid-2011, will be funded
through a combination of cash, debt and up to $2 billion in
equity.
Caterpillar said it will keep the mining-business headquarters
in South Milwaukee, Wis., where Bucyrus is currently headquartered,
and it will maintain the brand.
In October, Bucyrus said its third-quarter earnings fell 16% as
its underground-mining income slipped. Meanwhile, Caterpillar's
profit nearly doubled as machinery sales jumped sharply from last
year's moribund levels.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com