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CAT to buy mining manufacturer

Construction equipment giant, Caterpillar, is set to buy mining equipment manufacturer, Bacyrus International.

Bacyrus 495HR & Cat 793C Truck

Bucyrus 495HR Electric Mining Shovel loading a Cat 793C mining truck Image: Caterpillar

The deal, worth a total of $8.6bn, will bring together two of the worlds largest manufacturers in their respective sectors.  Caterpillar had already announced significant investment this year in further development of its own truck and shovel products.  Now, the company will become a leading producer of mining shovels and drills.

The acquisition, which includes around $1bn of net debt, will be funded from cash, debt and some $2bn of equity, offering a high value return for Bacyrus shareholders.

According to Caterpillar CEO, Doug Oberhelman: "The mining industry is very attractive to us for the long term.  With all the things going on around the globe with globalization, urbanization and demand for minerals, things in the earth, we will be strong for a long period of time.”

Caterpillar has estimated that from 2015 the acquisition could bring annual 'synergies' of more than $400m from the two companies, through joint sales and marketing, shared components, purchasing power and best practice production.

Tags: Corporate News, mining

Published 24th November, 2010

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