Caterpillar to Buy Bucyrus Int’l for $7.6 Billion (CAT, BUCY)


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Construction equipment maker Caterpillar Inc. ( CAT ) said Monday that it would buy mining equipment maker Bucyrus International, Inc. ( BUCY ) for a total of $8.6 billion, including $1 billion in debt.

The $92 per-share offer represents a 32% premium over BUCY's Friday closing price of $69.62. The cash value of the deal is $7.6 billion, while CAT will also assume $1 billion in BUCY's debt.

Caterpillar will finance the deal with cash, debt, and up to $2 billion in equity. The companies said they expect the deal to close in the middle of 2011.

Caterpillar CEO Doug Oberhelman commented, "For several years, mining customers have been asking us to expand our range of products and services to better serve their increasingly complex requirements. This announcement says to those customers, we heard you loud and clear."

Caterpillar shares fell $1.49, or -1.8%, in premarket trading Monday.

The Bottom Line
We recently removed Caterpillar ( CAT ) from our recommended list. The stock has technical support in the $76-$77 price area. If the shares can firm up, we see overhead resistance around the all-time high $84 price level.

Caterpillar Inc. ( CAT ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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