BUCY Bucyrus International, Inc. (MM)

Progress Rail Services, a wholly owned subsidiary of Caterpillar Inc. (CAT), will buy a track work manufacturing business of the U.K.-based Balfour Beatty Plc for an undisclosed amount.

Balfour Beatty designs and manufactures steel castings, track panels, turnouts, rail switches and crossings at five different sites in the U.K. The business reportedly generated revenue of £ 55 million in 2010 and possessed gross assets of £ 43 million.  The transaction will be completed in May, 2011.

The company is a world-class infrastructure company providing rail infrastructure facilities in over 20 countries and having its presence in professional services, construction services, support services and infrastructure investments.

According to a Balfour official, Progress Rail is an industry partner which will help develop the UK switching and crossing business further, apart from integrating it into the company’s worldwide manufacturing programs.

Caterpillar’s acquisition pipeline has always been packed with myriad deals; including a joint venture with a Chinese auto parts manufacturer, Shaanxi Fast Gear Co.; a contract in Iraq to build power plants to augment its electricity output and, lastly,  the acquiistion of Bucyrus International Inc. (BUCY).

Bucyrus International is a South Milwaukee-based manufacturer of surface and underground mining equipment, which Caterpillar had bought for $8.6 billion in cash. Caterpillar had a strong cash balance and cash flow of $3.6 billion and $5 billion at the end of fiscal 2010.

We currently have a Zacks #2 Rank (short-term Strong Buy recommendation) on the stock.

Peoria, Illinois-based Caterpillar Inc. is the manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company is one of the few leading U.S. companies in an industry that competes globally from a principally domestic manufacturing base. Caterpillar operates three divisions – Machines, Engines and Financial Products. Caterpillar competes with the likes of CNH Global NV (CNH), Komatsu Ltd. and VolvoAB.

 
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