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Caterpillar to Buy German Engine Firm for $810 Million

Caterpillar said Friday it is buying a German engine maker, MWM Holding GmbH, from private-equity firm 3i for 580 million euros, or about $810 million, in cash.

**FILE** Rows of heavy Caterpillar equipment sits ready for shipment at the Caterpillar plant in Decatur, Ill.,in this April 20, 2007 file photo. For American companies with operations that stretch overseas, the slumping dollar has become a fiscal life preserver amid slower domestic economic growth and waning sales. (AP Photo/Seth Perlman, file)
Seth Perlman
**FILE** Rows of heavy Caterpillar equipment sits ready for shipment at the Caterpillar plant in Decatur, Ill.,in this April 20, 2007 file photo. For American companies with operations that stretch overseas, the slumping dollar has become a fiscal life preserver amid slower domestic economic growth and waning sales. (AP Photo/Seth Perlman, file)

Caterpillar , the world's largest maker of construction and mining equipment, said the deal will help it significantly expand options for customers of its electric power division.

MWM, which stands for Motoren-Werke Mannheim, specializes in combustion engines for natural gas, special gases and diesel.

The deal comes a day after Caterpillar of Peoria, Ill., reported strong profits for the third quarter and raised its outlook for 2010.

Caterpillar is spending money on several projects to increase production capacity, and earlier this year it acquired locomotive maker Electro-Motive Diesel.

The companies said private-equity firm 3i would see a rate of return in excess of 25 percent for its three-year investment in MWM.

The acquisition is expected to close in the coming months, pending regulatory approval.