According to a Wall Street Journal report, Peoria, Ill.-based Caterpillar is offering HK$0.88 per share in cash or a loan note worth between HK$0.75 and HK$1.15 per share for ERA Mining, a maker of hydraulic roof supports and other equipment used by coal miners. Caterpillar officials declined comment.

The loan note has a lower initial value, but it would become more valuable should ERA Mining profitability exceed certain levels, according to the report. The company's shares traded at HK$0.66 apiece on Thursday, Nov. 10, giving it a market capitalization of HK$3.75 billion.

Caterpillar has been a buyer of mining assets of late. Caterpillar earlier this year closed an $8.8 billion purchase of South Milwaukee, Wis.-based Bucyrus International Inc., a manufacturer of draglines, drills and shovels used in the surface mining industry. The expansion comes as a spike in commodity prices in recent years and growing demand for raw materials from the developing world have sparked investment by mining companies in new equipment.

Caterpillar, despite the Bucyrus deal, has been criticized by analysts for falling behind in China and throughout Asia compared to rivals including Japan's Komatsu Ltd. and Sany Heavy Industry Co. Ltd. of China. Bucyrus archrival Joy Global Inc. of Milwaukee has also been pushing to expand in the region, announcing plans in July to acquire a 41% stake in Hong Kong-based International Mining Machinery Holdings Ltd. for HK$4.54 billion.

According to the report, Citigroup Inc. is advising Caterpillar in the purchase of ERA, with Blackstone Group LP working with the seller.

Caterpillar has been spending money amid a weak economy and choppy markets. In addition to its mining deals, its Progress Rail Services Corp. unit in June announced an $820 million deal to purchase Electro-Motive Diesel Inc. from private equity firms Berkshire Partners LLC and Greenbriar Equity Group LLC, and also bought track maintenance equipment maker FCM Rail Ltd. for an undisclosed price.