Monday, November 15, 2010

Caterpillar To Buy Mining-Equipment Company Bucyrus For $7.6B

PEORIA, Ill. and SOUTH MILWAUKEE, Wis. – Caterpillar Inc. (NYSE: CAT)
and Bucyrus International, Inc. (Nasdaq: BUCY) announced today they have entered into
an agreement under which Caterpillar will acquire Bucyrus International in a transaction
valued at approximately $8.6 billion (including net debt). The acquisition is based on
Caterpillar’s key strategic imperative to expand its leadership in the mining equipment
industry, and positions Caterpillar to capitalize on the robust long-term outlook for
commodities driven by the trend of rapid growth in emerging markets which are
improving infrastructure, rapidly developing urban areas and industrializing their
Under the terms of the 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 of all cash. The transaction represents an implied premium of 32
percent to Bucyrus' share price as of November 12, 2010. Caterpillar will fund the
acquisition through a combination of cash from the balance sheet, debt and up to $2
billion in equity. The transaction is expected to close in mid-2011. Caterpillar intends to
locate its mining business headquarters in South Milwaukee, Wisconsin, where Bucyrus
headquarters is currently located, and maintain the Bucyrus brand for the principal
Bucyrus legacy products.
“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 CEO Doug Oberhelman. “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. Our strategy calls for disciplined investment in
attractive industries that value our product and service delivery model," Oberhelman said.
"Our performance through the global economic turmoil of 2008-2009 allowed us to
emerge with a strong balance sheet and the ability to make strategic investments in
companies like Bucyrus. This, and other recent acquisitions, will position Caterpillar for
industry leadership and will be positive for our stockholders, customers and employees.”
Tim Sullivan, Bucyrus President and CEO, said, “This is an outstanding and
financially compelling transaction for our shareholders. More fundamentally, it is a
testament to the tremendous value our talented team of employees has created over the
past several years and to the strength of our brand in the global mining machinery
marketplace. I am confident that we have found an excellent partner in Caterpillar.
Caterpillar is a first-rate global company and it shares our commitment to providing
innovative products and exceptional service to customers, creating a collaborative and
safe work environment for employees and minimizing the impact on the environment.
We are very pleased that Caterpillar has committed to locate its mining business
headquarters in Milwaukee and we are confident that the combined global platform will
be extremely well positioned to capitalize on the substantial growth opportunities in this
market in the years ahead.”
The closing of the transaction is subject to regulatory approvals, customary
closing conditions and approval by Bucyrus stockholders. At that time, Caterpillar Group
President Steve Wunning will have executive office accountability for Bucyrus, along
with his current responsibilities for the company’s mining business.
“Even today at mine sites around the world, our customers are using Bucyrus
shovels to load Caterpillar mining trucks,” Wunning said. “This combination, as well as
the significant expansion in products and facility capacity already announced, gives us
the opportunity to expand the range of surface and underground mining products and
solutions offered to customers by Caterpillar and its dealer network.”
A driving motivation for the transaction is Caterpillar’s estimate of more than
$400 million in annual synergies beginning in 2015 derived from the combined financial
strength and complementary product offerings of the combined mining equipment
Synergies driven by the acquisition include:
• Market leading sales and support capabilities of Caterpillar dealers and a
broad, one-stop shop for global mining customers
• Caterpillar Remanufacturing products and services for Bucyrus equipment
• Caterpillar engines and components to enhance performance and lower owning
and operating costs for Bucyrus equipment
• Additional scale and cost efficiencies in areas such as purchasing and engineering
• Deployment of manufacturing best practices through the Caterpillar Production
J.P. Morgan Securities LLC served as exclusive financial advisor for Caterpillar
and has provided committed financing for the transaction. Mayer Brown LLP, Sidley
Austin LLP and Howrey LLP served as legal advisors for Caterpillar.
Deutsche Bank Securities Inc. and UBS Investment Bank served as financial
advisors for Bucyrus. Sullivan & Cromwell LLP and Arnold & Porter LLP served as
legal advisors for Bucyrus.


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