Caterpillar Inc. last week completed its acquisition of Bucyrus International and received notification from the Ministry of Commerce of the People’s Republic of China (MOFCOM) that it formally approved Caterpillar’s planned acquisition of the Oak Creek, Wis.-based mining equipment company.
The United States Department of Justice previously announced its clearance of the transaction. The MOFCOM clearance was the last major regulatory requirement needed for the acquisition to be completed.
Caterpillar funded the acquisition, valued at approximately $8.8 billion (including net debt), using cash from its balance sheet and debt. As a result of excellent cash flow and an increasingly strong balance sheet, the company did not issue equity to help fund the transaction. In May, the company issued $4.5 billion of new debt at historically low rates.
Caterpillar group president Steve Wunning will have executive office accountability for Caterpillar’s Global Mining business, including Bucyrus.
“We are pleased to complete this acquisition and are proud to welcome Bucyrus employees to Caterpillar,” Wunning said. “We are bringing together the best people, the best products and the best facilities from both companies. This acquisition is all about growth and unprecedented opportunities. Combined with our aggressive product development and capacity expansion plans, it will position Caterpillar to offer a broad range of surface and underground mining products and solutions to our customers.”
Since announcing the acquisition last November, Caterpillar has been planning the integration of Bucyrus into the Caterpillar group. As previously announced, the Caterpillar Global Mining headquarters will be in Oak Creek, Wis., and will include three mining divisions reporting to Steve Wunning.
Caterpillar vice president Dave Bozeman will lead the Integrated Manufacturing Operations Division, which will include the global manufacturing operations for Caterpillar mining products. The division has manufacturing operations in Asia, Australia, Europe and North America.
Caterpillar vice president Chris Curfman will lead the Mining Sales and Marketing Division, with global responsibility for maintaining and enhancing customer relationships, developing the global marketing strategy and ensuring future growth opportunities.
Luis de Leon, previously chief operating officer for Bucyrus, has been elected by the Caterpillar board of directors as a corporate vice president, and will lead the new Mining Products Division. The division will be responsible for overall mining product strategy development, product design and product sourcing.
In addition, several other Caterpillar divisions will provide critical support to the mining business, including the Large Power Systems Division, Advanced Components & Systems Division, Remanufacturing & Components Division, Parts Distribution & Logistics Division and Global Purchasing Division.
In evaluating the best approach for branding legacy Bucyrus products, Caterpillar sought input from dealers, customers, the leadership of Bucyrus and outside industry and branding experts, and concluded that a single brand — Caterpillar — was the right choice for its mining products.
“As we examined this issue, it became clear it would be in the best long-term interests of our business to have a single brand for our mining customers, and that brand will be Caterpillar,” Wunning said. “This decision is important to quickly bring together one team with a single face to our customers. The decision was endorsed by the Bucyrus board of directors, and we will begin to transition Bucyrus products to the Caterpillar brand in a quick and orderly fashion.”
In addition, the company determined that the capabilities of the Cat dealer network with mining customers meant that all products should be sold and serviced by Cat dealers. Since Bucyrus predominantly employed a direct model to sell and support products, Cat is beginning the process to transition distribution and support to Cat dealers. It plans to sell the Bucyrus distribution business to Caterpillar dealers that support mining customers around the world.
“Today’s announcement marks the beginning of a new era in Caterpillar’s mining business,” said Wunning. “The joining of these two iconic companies is an incredible combination. It positions us for long-term success in an industry with significant growth potential, and we intend to fully leverage our unique strengths to help the mining customer make money. In turn, that will benefit our employees, our stockholders, and the communities in which we live and work.”
Caterpillar will conduct a 90-minute real-time, listen-only teleconference to discuss the acquisition of Bucyrus and second-quarter 2011 financial results at 9:30 a.m. Central Time on July 22. The conference call can be accessed by telephone from both domestic and international locations, with listen-only entry code 5621. For domestic callers, dial 877-216-8554. For international callers, dial 973-528-0009.
To access a telephone replay of this call, dial 800-332-6854 (for domestic callers) and 973-528-0005 (for international callers) and enter 5621 as the conference ID. The call can also be accessed in real-time through www.caterpillar.com/Irwebcast.
For more information about Caterpillar Global Mining, visit mining.cat.com.
Caterpillar Inc., Peoria, Ill., is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. Bucyrus is a world leader in the design and manufacture of high-productivity mining equipment for the surface and underground mining industries. Bucyrus’ surface mining equipment is used for mining coal, copper, iron ore, oil sands and other minerals.
