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Caterpillar to purchase Bucyrus

CATERPILLAR have announced that they are to acquire Bucyrus International, manufacturers of surface and underground mining equipment, in a transaction worth $8.6 billion (including net debt). The acquisition is based on Caterpillar’s key strategic imperative to expand their presence in the mining equipment industry.

Earlier this year Bucyrus purchased the mining equipment business of Terex Corp. for $1 billion in cash, plus nearly 5.8 million shares of Bucyrus common stock.

Under the terms of the latest transaction, which has been approved by the boards of directors of both companies, Bucyrus shareholders will receive $92 per share – $7.6 billion in aggregate consisting entirely of cash.

Caterpillar will fund the acquisition through a combination of cash from the balance sheet, debt and up to $2 billion in equity. The company intends to locate its mining business headquarters in South Milwaukee, Wisconsin, where Bucyrus headquarters is currently based. Caterpillar will also maintain the Bucyrus brand for principal legacy products.

The deal is expected to deliver in excess of $400 million in annual synergies  beginning in 2015.

‘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 Doug Oberhelman, chairman and CEO of Caterpillar. ‘This announcement says to those customers – we heard you loud and clear. It is a strong statement about our belief in the bright future of the mining industry.’

The acquisition transaction is expected to close in mid-2011, subject to regulatory approvals.

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