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Caterpillar To Pay $8.6B For Mining Gear Maker Bucyrus
By Tiernan Ray

Shares of Caterpillar (CAT) are down $1.44, or 1.8%, at $79.60 in pre-market trading after the company announced it would purchase Milwaukee, Wisconsin-based Bucyrus (BUCY), a maker of mining equipment, for $8.6 billion, including assumption of debt.

Bucyrus shareholders will receive $92 per share in cash: hence, the stock is currently trading $20.66, or 30%, above its close Friday, at $90.28. Caterpillar will use some combination of cash on hand, debt, and $2 billion of equity to fund the deal, which it expects to close in the middle of next year. The headquarters for the new mining operation will stay in Milwaukee, Caterpillar said.

Doug Oberhelman, CEO of Caterpillar, remarked that, “For several years, mining customers have been asking us to expand our range of products and services to better serve their increasingly complex requirements.” The deal “is a strong statement about our belief in the bright future of the mining industry,” said Oberhelman.

Bucyrus’s products include “draglines,” which clear the surface rubble of a mining operation, and “off-highway” dump trucks for hauling material away from a mining site.

Caterpillar estimates the companies have $400 million in annual synnergies between them.