Caterpillar Inc. today signed an agreement that would result in Platinum Equity acquiring a 65-percent equity stake in Caterpillar Logistics Services LLC, the third-party logistics division of its wholly owned subsidiary, Caterpillar Logistics Inc. The pending sale of the third-party business supports Caterpillar’s increased focus on the continuing growth opportunities in its core businesses. The overall transaction is valued at approximately $750 million. Under the terms of the agreement, Caterpillar would retain a 35 percent equity stake. Other terms are not being disclosed.
The closing of the transaction is pending customary closing conditions including regulatory approvals and consultation with employees and employee representatives, in accordance with local, country and regional employment practices.
“The sale of the third-party logistics business would be a key step in the execution of our enterprise strategy,” said Stu Levenick, Caterpillar group president with responsibility for customer & dealer support. “This event enables Caterpillar to increase its focus on our core business that aligns with our strategic business model. We believe the transaction with Platinum will set the third-party logistics business on a path for continued growth and success.”
Over the past 25 years, the third-party logistics business has provided outstanding logistics service to more than 50 customers worldwide in a number of different industries. As part of the agreement with Platinum, the third-party logistics business will continue to provide logistics services for non-Cat-branded parts including FG Wilson, Perkins, Solar, as well as for Caterpillar Japan.
Platinum Equity Partner Jacob Kotzubei said the investment is a perfect fit for Platinum given the firm’s significant experience in executing carve-out transactions and operating logistics businesses.
“We have a lot of experience owning and operating businesses that provide complex supply-chain solutions,” said Kotzubei. “We know what customers expect, and we share Cat Logistics’ commitment to the highest levels of service and dependability.”
“We are excited about this opportunity to partner with Platinum Equity. We are confident we have chosen the right partner to focus on the third-party logistics business and grow it to build long-term value,” said Steve Larson, vice president of Caterpillar and chairman and president of Cat Logistics. “As the transaction is finalized, we are committed to working closely with Platinum to ensure a seamless transition so customers continue to receive the high level of service and value they have come to expect.”
The proposed sale does not impact Caterpillar manufacturing logistics and transportation operations and Cat brand parts distribution; they will continue as core businesses within Cat Logistics. In fact, Caterpillar previously announced plans for a multi-year expansion and enhancement of the Cat parts distribution network, which, to date, has added more than four million square feet of capacity in new parts distribution centers in the United States, Mexico and the United Arab Emirates.
The transaction is expected to close in the third quarter of 2012.
Headquartered in Peoria, Ill., Caterpillar is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services.