Caterpillar Inc. (Peoria, IL) and Bucyrus International (Milwaukee, WI) have entered into an agreement under which Caterpillar will acquire Bucyrus International in a transaction valued at approximately $8.6 billion. The acquisition is based on Caterpillar's plan to expand its leadership in the mining equipment industry.
Under the terms of the
transaction, Bucyrus shareholders will receive $92 per share, $7.6 billion in
aggregate consisting of all cash. The transaction represents an implied premium
of 32 % 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
where Bucyrus headquarters are currently located, and maintain the Bucyrus
brand for the principal Bucyrus legacy products.
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.