(Updates with background, detail, share prices)
Caterpillar Inc. (CAT) announced plans Monday to acquire Bucyrus
International Inc. (BUCY) for about $7.6 billion in cash to create
an integrated mining-equipment business as the rally in global
commodities demand shows little sign of abating.
The U.S. heavy-equipment specialist has long eyed expanding its
footprint in the mining sector, and Bucyrus would add a portfolio
of shovels and other extraction machinery to its line-up of large
trucks and earth movers.
Caterpillar is offering $92 for each Bucyrus share, a 32%
premium to Friday's closing price, with debt lifting the enterprise
value to $8.6 billion.
Shares in Milwaukee-based Bucyrus were recently up 29.6% at
$90.24. The Milwaukee-based company recently overtook cross-town
rival Joy Global Inc. (JOYG) as the world's largest mining
equipment maker by acquiring assets from Terex Corp. (TEX). Joy
Global shares were up 6.9% at $77.40.
The proposed deal--scheduled to close in mid-2011--is the first
large-scale move by Caterpillar Chairman and Chief Executive Doug
Oberhelman since he took over the company in the summer.
"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 Oberhelman in a
statement."
Caterpillar shares fell 1.8% to $79.60 in premarket trade.
The deal 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, and it will
maintain the brand.
Bucyrus had an order book of $2.53 billion at the end of the
third quarter, with bookings recovering over the past year after a
slump when the commodity bubble burst in mid-2008. Analysts
estimate it will have sales this year of $3.5 billion in annualized
sales this year.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com
Doug Cameron contributed to this article