Wednesday, June 1, 2011

CAT - BUCY One Step Closer

On Tuesday, May 24, the U.S. Department of Justice cleared the deal allowing Caterpillar to follow through with their $8.6 Billion buyout of Bucyrus International Inc. The importance behind this acquisition for CAT is to gain more exposure into the market for coal and minerals, where prices are rapidly increasing. Bucyrus generated $2.6 Billion in revenues in its last year, and CAT believes they will be able to see operating profits from the acquisition as early as 2013, and that they should exceed $400 million after that. Following the approval, CAT announced the sale of $4.5 Billion in debt, which would be their largest ever. Additionally, the company plans to use cash for the rest of the acquisition, declining to sell more equity.

Jeremy Pellizzari

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