Finning/Caterpillar Bucyrus agreement
First publishedon www.AggBusiness.com
Finning International, represented in the UK by Finning UK and Ireland, and Caterpillar have reached an agreement for Finning to acquire from Caterpillar the distribution and support business formerly operated by Bucyrus in portions of South America and Western Canada and in the UK.
After closing, Finning expects to begin providing sales, service and support for former Bucyrus mining products in all of Finning's dealership territories.
The transaction is valued at approximately US$465 million (€365 million). Finning expects to fund the transaction primarily through the issuance of US and Canadian dollar denominated term debt. The transaction is expected to be accretive to Finning’s 2012 earnings.
“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. 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,” said Mike Waites, president and CEO of Finning International. “This acquisition provides an industry-leading product platform and sizeable Bucyrus machine population in our resource rich mining territories in South America and Canada. This acquisition adds new revenue opportunities and robust, long-term growth potential for our company and employees.”
Steve Wunning, Caterpillar group president with responsibility for resource industries, said: “We’re making good progress as we transition the product distribution and support of former Bucyrus machinery to Cat dealers around the world. 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.Finning and Caterpillar have shared a longstanding relationship for close to 80 years, and we look forward to realising the growth opportunities created by this agreement.”
The acquired distribution and support business, which has current annual revenues of about US$600 million (€471 million), includes facilities and inventory primarily in South America and Canada, as well as approximately 900 former Bucyrus employees who are expected to transition to Finning on closing of the acquisition. Subject to customary closing conditions, it is anticipated that the transaction will close in two phases: in Finning South America and Finning UK and Ireland late in the first quarter of 2012, followed by Canada in the second quarter.
Gary Agnew, equipment solutions director at Finning UK and Ireland said: “The mining industry is hugely important to Finning. This agreement allows us to build even further on our core strength in the mining sector. I’m confident that we now have the best equipment and the very best support available in the industry today and we very much look forward to working with Bucyrus’ existing customers and playing our part in helping to drive the growth of the mining industry at both a local and national level.”
In December, Caterpillar announced Sime Darby Industrial had acquired a portion of the former Bucyrus distribution business encompassing the Cat dealerships operated by Hastings Deering. Caterpillar continues to hold discussions with other Cat dealers that have mining activity in their territories and will continue to operate the former Bucyrus distribution business until the transitions have occurred in a given territory.
Finning will be filing a material change report (and related documents) in respect of this transaction.