Caterpillar Inc. said Thursday it intends to buy ERA Mining Machinery for as much as $887 million, giving Illinois-based Caterpillar greater exposure to the modernization of China's coal mines.

 Caterpillar's offer represents a 33% premium to ERA's stock price in Hong Kong before trading was halted Monday in expectation of a takeover announcement. Caterpillar is the world's largest manufacturer of earth-moving and mining equipment.

ERA primarily makes hydraulic roof supports for underground mines and is the third-largest maker of roof supports in China based on sales. For the six months ended June 30, ERA recorded sales of HK$787.2 million (US$101.3 million), up 86% from the year-earlier period. Net profit for the six-month period totaled HK$20.9 million.

The purchase will fortify Caterpillar's recent acquisition of mining-equipment manufacturer Bucyrus International. Although Bucyrus makes roof supports, it and other Western mining-equipment companies have had difficulty penetrating China's coal-mining industry with their own brands and product lines. China's mining sector includes many smaller mine operators that are fiercely loyal to domestic machinery brands, industry observers say.