Caterpillar to Buy Bucyrus in $8.6 Billion Deal

Caterpillar said Monday it would acquire Bucyrus in a transaction valued at about $8.6 billion, expanding its leadership in the mining equipment industry.


Under the terms of the transaction, which has been approved by the boards of both companies, Bucyrus shareholders will receive $92 per share in cash, Caterpillar said in a statement.

The deal, which represents an implied premium of 32 percent to Bucyrus' closing share price on Friday, includes net debt.

Bucyrus shares jumped about 30 percent Monday.

Caterpillar expects the deal to close in mid-2011.

Caterpillar will fund the acquisition through a combination of cash from its balance sheet, debt and as much as $2 billion in equity.

"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, in a statement.

"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."

Caterpillar estimates the deal will yield more than $400 million in annual cost savings beginning in 2015.

J.P. Morgan Securities served as exclusive financial advisor for Caterpillar, while Deutsche Bank Securities and UBS Investment Bank served as financial advisors for Bucyrus.