NEW YORK – Caterpillar, the world's largest construction and mining equipment maker, moved aggressively to capitalize on demand in emerging markets Monday with a $7.6 billion buyout of Bucyrus International.Bucyrus makes surface mining equipment used for coal, copper, iron ore, oil sands and other minerals.With a grinding economic recovery ongoing in the West, global companies like Caterpillar Inc. have driven further into China, India and Brazil, where the appetite for raw materials used in construction and mining are strong.Caterpillar said last month its third-quarter profit doubled, thanks in large part to growth in those markets.With the Bucyrus deal, Caterpillar seeks to expand its footprint in countries that are "improving infrastructure, rapidly developing urban areas and industrializing their economies," the company said Monday. The deal will also significantly expand Caterpillar's line of mining equipment and double its mining revenue.Caterpillar and Bucyrus officials said mining companies will also benefit from the deal because they'll be able to purchase much of their equipment and parts from a single supplier with less hassle and lower costs."This fits completely into the strategy of our customers," Bucyrus CEO Tim Sullivan said.After years of cutting costs, industry experts had been waiting for a major acquisition like the one Caterpillar announced."I think Caterpillar is definitely doubling down, not just on emerging markets, but on commodities in general," Morningstar analyst Adam Fleck said. "Caterpillar is suggesting that we're in the very early innings of the commodity price rebound."Specifically, Fleck thinks Caterpillar is focusing on coal, of which China is a massive importer.To land Bucyrus International Inc., based in South Milwaukee, Wis., Caterpillar will pay $92 per share, a 32 percent premium to Bucyrus' closing price on Friday. The deal, which is valued at $8.6 billion including debt, is expected to close in mid-2011. Caterpillar plans to base its mining division in South Milwaukee.Shares of Bucyrus jumped 29 percent to $89.75 in afternoon trading.Caterpillar made drastic cuts during the recession, vowing then that it would be in a better position when the economy rebounded. It cut 37,000 full-time, contract and part-time workers, though it's since hired back about 15,000 people.The company now appears ready to make good with a market share grab that could put it in a commanding position in places where the economy has rebounded."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," Chairman and CEO Doug Oberhelman said.There is little overlap between the products Caterpillar and Bucyrus offer now, so Caterpillar still plans to invest nearly $700 million to expand production of its own mining trucks. That investment was announced earlier this year."We think it's a great time to invest in mining," Oberhelman said.The Peoria, Ill. company said last month it expects the global economy to grow by about 3.5 percent next year, on par with economists' forecasts. But the company predicts developing regions will grow at about double that rate. And even in the emerging economies where growth is slower, Caterpillar said the replacement of worn out machinery will drive sales even before those economies markedly improve.The deal, which got the go-ahead from both company boards, still requires approval by regulators and Bucyrus shareholders. Caterpillar predicted the deal would add about $400 million a year to its operating profit, starting in 2015, through sales growth and some cost savings.Fleck said he does not anticipate serious regulatory hurdles for the deal.___AP Business Writer Josh Funk contributed to this story from Omaha, Neb.___Online:Caterpillar Inc.: Bucyrus International: Your Voice Form the Moon mp3 songs download.Academia de Baile Tropical album.Pump Up the Sound EP mp3.Introspection song.Lakshmi tracks
Caterpillar digs deep in $7.6B deal for Bucyrus
NEW YORK – Caterpillar, the world's largest construction and mining equipment maker, moved aggressively to capitalize on demand in emerging markets Monday with a $7.6 billion buyout of Bucyrus International.Bucyrus makes surface mining equipment used for coal, copper, iron ore, oil sands and other minerals.With a grinding economic recovery ongoing in the West, global companies like Caterpillar Inc. have driven further into China, India and Brazil, where the appetite for raw materials used in construction and mining are strong.Caterpillar said last month its third-quarter profit doubled, thanks in large part to growth in those markets.With the Bucyrus deal, Caterpillar seeks to expand its footprint in countries that are "improving infrastructure, rapidly developing urban areas and industrializing their economies," the company said Monday. The deal will also significantly expand Caterpillar's line of mining equipment and double its mining revenue.Caterpillar and Bucyrus officials said mining companies will also benefit from the deal because they'll be able to purchase much of their equipment and parts from a single supplier with less hassle and lower costs."This fits completely into the strategy of our customers," Bucyrus CEO Tim Sullivan said.After years of cutting costs, industry experts had been waiting for a major acquisition like the one Caterpillar announced."I think Caterpillar is definitely doubling down, not just on emerging markets, but on commodities in general," Morningstar analyst Adam Fleck said. "Caterpillar is suggesting that we're in the very early innings of the commodity price rebound."Specifically, Fleck thinks Caterpillar is focusing on coal, of which China is a massive importer.To land Bucyrus International Inc., based in South Milwaukee, Wis., Caterpillar will pay $92 per share, a 32 percent premium to Bucyrus' closing price on Friday. The deal, which is valued at $8.6 billion including debt, is expected to close in mid-2011. Caterpillar plans to base its mining division in South Milwaukee.Shares of Bucyrus jumped 29 percent to $89.75 in afternoon trading.Caterpillar made drastic cuts during the recession, vowing then that it would be in a better position when the economy rebounded. It cut 37,000 full-time, contract and part-time workers, though it's since hired back about 15,000 people.The company now appears ready to make good with a market share grab that could put it in a commanding position in places where the economy has rebounded."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," Chairman and CEO Doug Oberhelman said.There is little overlap between the products Caterpillar and Bucyrus offer now, so Caterpillar still plans to invest nearly $700 million to expand production of its own mining trucks. That investment was announced earlier this year."We think it's a great time to invest in mining," Oberhelman said.The Peoria, Ill. company said last month it expects the global economy to grow by about 3.5 percent next year, on par with economists' forecasts. But the company predicts developing regions will grow at about double that rate. And even in the emerging economies where growth is slower, Caterpillar said the replacement of worn out machinery will drive sales even before those economies markedly improve.The deal, which got the go-ahead from both company boards, still requires approval by regulators and Bucyrus shareholders. Caterpillar predicted the deal would add about $400 million a year to its operating profit, starting in 2015, through sales growth and some cost savings.Fleck said he does not anticipate serious regulatory hurdles for the deal.___AP Business Writer Josh Funk contributed to this story from Omaha, Neb.___Online:Caterpillar Inc.: Bucyrus International: Your Voice Form the Moon mp3 songs download.Academia de Baile Tropical album.Pump Up the Sound EP mp3.Introspection song.Lakshmi tracks