Caterpillar continues to spin off the distribution and support business it inherited in its purchase of Bucyrus International, with the announcement that Finning International Inc. will acquire, from Caterpillar, the distribution and support business formerly operated by Bucyrus in portions of South America and Western Canada and in the U.K.

The transaction is valued at approximately $465 million. Finning expects to fund the transaction primarily through the issuance of U.S. and Canadian dollar denominated term debt. After closing, Finning expects to begin providing sales, service and support for former Bucyrus mining products in all of Finning's dealership territories.

This is the second such move Caterpillar has made with one of its dealers for the Bucyrus aftermarket business. In December, Caterpillar announced Sime Darby Industrial had acquired a portion of the former Bucyrus distribution business encompassing the Cat dealerships operated by Hastings Deering.

"We're making good progress as we transition the product distribution and support of former Bucyrus machinery to Cat dealers around the world," said Steve Wunning, Caterpillar group president with responsibility for Resource Industries.

The acquired distribution and support business, which has current annual revenues of about USD $600 million, includes facilities and inventory primarily in South America and Canada, as well as approximately 900 former Bucyrus employees who are expected to transition to Finning upon closing of the acquisition.

Subject to customary closing conditions, it is anticipated that the transaction will close in two phases: in Finning South America and Finning U.K. and Ireland late in the first quarter of 2012, followed by Canada in the second quarter.

Caterpillar said it continues to hold discussions with other Cat dealers that have mining activity in their territories and will continue to operate the former Bucyrus distribution business until the transitions have occurred in a given territory.

Source:cmbol.com