Caterpillar Selling Bucyrus Distributorships for $465 Million
A Vancouver-based distributor of Caterpillar equipment is set to buy a large portion of the distribution and service business of Bucyrus International – the mining equipment manufacturer that Caterpillar bought last summer for $8.6 billion. The pending sale is estimated at $465 million.
Finning International Inc. will acquire the businesses formerly operated by Bucyrus in parts of South America, Western Canada, and in the U.K. Also, Finning will begin to offer sales, service, and support for former Bucyrus mining products in all of its own dealership territories.
"The acquisition of the Bucyrus distribution business is a major strategic milestone for Finning that will expand our leadership position in the growing mining sector and deliver greater value for our customers and shareholders,” stated Mike Waites, Finning president and CEO.
“Seldom in my career have I seen an opportunity like this,” Waites elaborated during conference call. “This is an opportunity to increase our core mining business by 25-30% in one step.”
Bucyrus designs and manufactures surface mining and underground mining equipment for coal, copper, iron ore, oil sands, and other minerals. It also produces original equipment parts for other manufacturers. Finning is gaining distribution for those products in some of the world’s most active mining regions, including Chile and Western Canada.
“Upon the close of this acquisition, Finning will be able to sell and support a comprehensive product line that meets our customers' surface and underground mining equipment needs," Waites said in his statement.
Caterpillar is consolidating its distribution organization. In December, it announced it sold part of the former Bucyrus distribution business, including Cat dealerships operated by Hastings Deering, to Sime Darby Industrial. It is discussing plans for other Cat dealers that have mining activity in their territories. It will continue to operate the former Bucyrus distribution business until transitions are arranged.
"We're making good progress as we transition the product distribution and support of former Bucyrus machinery to Cat dealers around the world," stated Caterpillar group president Steve Wunning, who is responsible for Resource Industries. "Cat dealers have a proven track record helping customers realize the highest productivity and lowest owning and operating costs, and many mining customers have told us how important the dealers are to their success."
