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Caterpillar sells on Bucyrus operations

by Andrew Bulkeley | Published December 14, 2011 at 9:11 AM

Heavy-equipment maker Caterpilar Inc. on Wednesday, Dec. 14, agreed to sell the Australian distribution operations of Bucyrus International Inc. to Sime Darby Bhd. after completing its $8.8 billion acquisition of the mining-equipment maker this summer.

Caterpillar said Malaysian conglomerate Sime Darby, its local distribution partner, would pay $360 million to fold the Bucyrus distribution business into its existing Hastings Deering (Australia) Ltd. distributor in Queensland and the Northern Territory of Australia, Papua New Guinea and New Caledonia, off the coast of Australia.

Peoria, Ill.-based Caterpillar became the world's biggest producer of mining equipment with the Bucyrus purchase. Caterpillar said Wednesday's sale agreement was just the start of a series of divestments to align the Bucyrus activities with its strategy. Caterpillar relies on an independent network of distributors to sell and maintain its mining products.

"Caterpillar is currently holding discussions with other Cat dealers that have mining activity in their territories," the company said.

Hastings Deering will take over 400 Bucyrus employees as part of the acquisition, the company said.

The Bucyrus International takeover was just one in a string of agreements designed to allow Caterpillar to dig deeper in the global mining-equipment market and better compete with the likes of Japan's Komatsu Ltd. It recently paid €580 million ($753.2 million) buying Mannheim, Germany-based alternative fuel engines maker MWM Holding GmbH from listed London financial investor 3i Group plc.

Its aggressive acquisition strategy has even put it at the eye of a regulatory storm between the U.S. and China. Chinese regulators are currently reviewing its HK$6.9 billion ($886.5 million) acquisition of ERA Mining Machinery Ltd. The review comes after the U.S. rejected a 2010 attempt by Anshan Iron and Steel Group Corp. to invest in Mississippi-based Steel Development Co.

And Huawei Technologies Co. Ltd. was forced to unwind a deal for 3Leaf Systems Inc. in February, leading Chinese authorities to complain that U.S. takeover decisions were intransparent.

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