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

economies.

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

businesses.

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

System

Advisors:

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.