Vancouver-based Finning International Inc. (TSX:FTT) announced this morning it will acquire Caterpillar Inc.’s distribution and support business, which was formerly operated by Bucyrus in South America, Western Canada and U.K. The deal is valued at approximately US$465 million.
Mauk Breukels, Finning vice-president of investor relations and corporate affairs, told Business in Vancouver that Finning feels the deal will strengthen the company’s position in the marketplace.
“We are a key supplier to the mining industry,” he said, “And this acquisition allows us to extend our product line to the mining business significantly
Finning is the world’s largest Caterpillar equipment dealer.
Breukels noted that Caterpillar (NYSE:CAT) acquired Bucyrus more than a year ago in a play to extend Caterpillar’s product line.
“Caterpillar’s working with all the dealers worldwide to move forward on the distribution of what was formerly called Bucyrus product – in the future it will be Caterpillar product,” Beukels said.
According to a joint press release from Finning and Caterpillar, the acquired business currently has annual revenues of approximately US$600 million and includes facilities and inventory primarily in South America and Canada, plus about 900 former Bucyrus employees, who are expected to transition to Finning when the acquisition closes.
The deal is expected to close in two phases: late in the first quarter in 2012 for Finning South America and Finning U.K. and Ireland, followed by Finning Canada in the second quarter.
At press time, Finning’s stock was up nearly 6% to $25.86.
Jenny Wagler
@JennyWagler_BIV