Caterpillar (CAT), the world’s largest maker of construction and mining equipment, said Monday it will acquire Bucyrus International Inc. (BUCY) in a transaction valued at about $8.6 billion. The purchase price works out to $92 per share, a 32% premium to Bucyrus’ closing share price of $69.62 last Friday.
“For several years, mining customers have been asking us to expand our range of products and services to better serve their increasingly complex requirements,” said Caterpillar chairman and CEO Doug Oberhelman, in a statement.
“This announcement says to those customers, we heard you loud and clear. It is a strong statement about our belief in the bright future of the mining industry.”
Caterpillar, which estimated that the transaction would result in annual synergies of more than $400 million starting in 2015, said it plans to fund the deal through cash, debt and up to $2 billion in equity.
The acquisition, and what Caterpillar called a robust outlook for commodities, is expected to close in mid-2011. The boards of both companies have already approved the deal.
J.P. Morgan (JPM) served as exclusive financial advisor for Caterpillar, while Deutsche Bank (DB) and UBS AG (UBS) served as financial advisors for Bucyrus.
At last check, shares of Bucyrus rose $20.02, or 28.76%, to $89.64 in Nasdaq trading. Caterpillar rose $2.08, or 2.63%, to $83.01 on the New York Stock Exchange.