Monday, November 15, 2010

"Caterpillar Deal: Everything You Wanted to Know about Bucyrus" (BUCY; CAT)

From the WSJ's Deal Journal:
 Caterpillar announced this morning a deal to buy Bucyrus International Inc., a mining-equipment company, for $7.6 billion in cash as Caterpillar looks expand its mining foothold and take advantage of growing worldwide demand for commodities.

Caterpillar said the deal is the biggest acquisition in the company’s history. Bucyrus shareholders are slated to receive $92 a share, a 32% premium to the company’s stock price on Friday. Shares opened roughly 30% higher this morning, and share prices of other mining and equipment companies, including Joy Global, Terex and Manitowoc, also opened higher. Caterpillar is taking advantage of low interest rates and cheap financing; the company plans to fund the deal with cash on hand, debt and up to $2 billion in equity.
While Caterpillar is a household name, Deal Journal readers will be forgiven for not knowing the ins-and-outs of Bucyrus’s business. Here is a dossier on the company:

Main businesses: Makes equipment used in surface mining and underground mining in the hunt for coal, copper, oil sands, iron ore, gold and other minerals.

HQ: South Milwaukee, Wis.

Company history: Bucyrus’s predecessor company started in 1880 producing excavator machines. The company’s name is taken from Bucyrus, Ohio, where the predecessor company was founded.) The company’s machines were used in digging of the Panama Canal, according to the Bucyrus corporate timeline.

Largest markets: Australia, Canada, China, India, South Africa, South America, the U.S. and Germany

For those obsessed with big machines: Some of Bucyrus’s fun machines include electric mining shovels, hydraulic excavators, rotary blasthole drills, automated plow systems and draglines (big buckets used to dredge up and haul away rock and soil trapped above the coal). For you backyard miners, you can buy a Bucyrus dragline for $65 million to $200 million a pop....MORE