) is selling the equipment, distribution and support business,
formerly operated by Bucyrus International in South Africa and
Botswana, to Barloworld for $115 million. Caterpillar has also
assigned to Barloworld its agreements with Eqstra NH Equipment
(Pty) Limited and Eqstra Botswana (Pty) Limited for the purchase of
Eqstra's South Africa and Botswana Bucyrus distributorship and
mining services businesses. The total deal is valued at $175
The transaction pursuant to customary closing conditions and
regulatory approvals is expected to close in the third quarter of
2012. On completion, Barloworld will provide sales, service and
support for all of the former Bucyrus mining products in all its
dealership territories in southern Africa.
The business was included in Caterpillar's purchase of Bucyrus
Inc., a South Milwaukee-based manufacturer of surface and
underground mining equipment, in July 2011. The $8.8 billion buyout
was the biggest deal ever in Caterpillar's history. It capitalized
on the rising demand for coal and minerals triggered by growth in
Caterpillar is systematically divesting the Bucyrus distribution
businesses, preferably to its dealers having mining activities in
their territories. Caterpillar, however, will operate the Bucyrus
distribution business until the transitions have occurred in any
Last month, Caterpillar announced the sale of Bucyrus'
distribution and support unit in Western Australia, Australian
Capital Territory and New South Wales to WesTrac Pty Limited for
$400 million and Bucyrus' distribution and support business in Peru
to Ferreyros S.A.A. for $75 million.
Earlier, in January, Caterpillar inked a deal to sell Bucyrus'
distribution and support unit in South America, Western Canada and
the United Kingdom, to Finning International Inc for $465 million.
In last December, Caterpillar sold a part of the Bucyrus
distribution business to the Industrial Division of Sime Darby
Berhad for $360 million.
The Caterpillar-Bucyrus combined portfolio broadens
Caterpillar's mining equipment product line, resulting in the most
expansive product offering in the mining equipment industry.
Furthermore, Caterpillar can leverage Bucyrus' strong presence in
the emerging markets, its successful aftermarket parts business and
support services for its equipment. The Bucyrus acquisition
positions Caterpillar as the leading global mining original
Caterpillar's backlog is at a record level, which holds promise
for the year ahead. We believe Caterpillar's expansion plans of
opening new facilities and furthering existing operations,
particularly in the emerging markets, will boost its long-term
However, margin headwinds, the European debt crisis and a
slowing Chinese economy may affect its earnings in the near term.
Thus, we maintain our Neutral recommendation on Caterpillar. The
quantitative Zacks #3 Rank (short term Hold rating) for the company
indicates no clear directional pressure on the stock over the near
Peoria, Illinois-based Caterpillar Inc. is the manufacturer of
construction and mining equipment, diesel and natural gas engines,
and industrial gas turbines. The company is one of the few leading
U.S. companies in an industry that competes globally from a
principally domestic manufacturing base. Caterpillar operates two
divisions - M&PS and Financial Products. Caterpillar competes
with the likes of
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