Caterpillar Acquires Bucyrus

Published by: Mike Goldman on 15th Nov 2010 | View all blogs by Mike Goldman
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Caterpillar Acquires Bucyrus

The largest manufacturer of mining and construction equipment in the world, Caterpillar, has reached an agreement to acquire Bucyrus International, who manufactures draglines, shovels, and other equipment related to coal mining.  Caterpillar will pay $8.6 billion for the company in a deal that values Bucyrus at $92 per share, a 32 percent premium over the company's stock at the close of Friday's trading session.

News of the acquisition sent the Farming, Mining, and Construction Index up by nearly 4 percent in early trading on Monday.  The deal would represent Caterpillar's largest-ever acquisition and is evidence of the company's commitment to expand its mining business presence as emerging economies raise global demand for coal and metals.

Caterpillar and Bucyrus are both on the index, but are not the only components to see increased volume on Monday.  Shares of Joy Global, Bucyrus' primary rival, spiked 8 percent early Monday on more than twice its usual daily volume, while Terex, another rival to Bucyrus, has gained 5 percent on volume that nearly reached the normal daily total in just the first hour of trading.  CNH Global NV also gained about 5 percent in early trading, and appears poised to easily eclipse its daily average of shares traded.  The increased activity is evident of investors speculation about which mining equipment maker will be purchased by a bigger company next.

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