Finning buys Bucyrus assets
By Canadian Press
Feb. 1, 2012 - Finning International is bulking up its position in the mining industry with the acquisition of the distribution and support businesses of former Bucyrus International from Caterpillar for US$465 million. The company issued a joint announcement with Caterpillar which said it would take control of the support business formerly operated by Bucyrus in South America, the U.K., and Western Canada.
By Canadian Press
Caterpillar acquired the Bucyrus business last July for US$8.8 billion and has since been negotiating the sale of certain pieces of the business. Last December, it agreed to sell its operations focused primariliy in Australia to Caterpillar dealer Sime Darby for $360 million.
Finning, already the world's largest Caterpillar dealer, said the transaction will be funded primarily through debt, and expects it to be accretive to earnings in 2012. The company expects to provide sales, service and support for former Bucyrus mining products in all of Finning's dealership territories.
"The acquisition of the Bucyrus distribution business is a major strategic milestone for Finning that will expand our leadership position in the growing mining sector and deliver greater value for our customers and shareholders,'' said Mike Waites, president and CEO of Finning.
Waites added that the acquisition in particular provides Finning with "an industry-leading product platform and sizable Bucyrus machine population'' in resource-rich mining territories in South America and Canada. That will mean "new revenue opportunities and robust, long-term growth potential for our company and employees.''
The acquired distribution and support business has current annual revenues of about US$600 million. It 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 deal.
Steve Wunning, Caterpillar group president with responsibility for resource industries, said the Finning deal showed that Caterpillar is making good progress in transitioning the Bucyrus business to Caterpillar dealers around the world.
"Finning and Caterpillar have shared a long-standing relationship for close to 80 years and we look forward to realizing the growth opportunities created by this agreement,'' Wunning said.
The transaction is expected to close in two phases: in Finning South America and Finning U.K. and Ireland late in the first quarter, followed by Canada in the second quarter.
Finning deals in Caterpillar equipment, as well as selling, renting and servicing equipment and engines at operations in Western Canada, Chile, Argentina, Bolivia and Uruguay, as well as in Ireland and the United Kingdom.