MERGER: Cat to acquire Bucyrus for US$8.6 billion

PEORIA, Illinois, and SOUTH MILWAUKEE, Wisconsin - Two of the world's largest heavy equipment makers will soon be one. Caterpillar and Bucyrus International have agreed to a deal under which Cat will acquire Bucyrus in a transaction worth...

PEORIA, Illinois, and SOUTH MILWAUKEE, Wisconsin - Two of the world's largest heavy equipment makers will soon be one. Caterpillar and Bucyrus International have agreed to a deal under which Cat will acquire Bucyrus in a transaction worth US$8.6 billion (including net debt).

Under the terms of the transaction, which has been approved by the boards of directors of both companies, Bucyrus shareholders will receive $92 per share, $7.6 billion in aggregate consisting of all cash. The transaction represents an implied premium of 32% to Bucyrus' share price as of Nov. 12, 2010. Caterpillar will fund the acquisition through a combination of cash from the balance sheet, debt and up to $2 billion in equity. The transaction is expected to close in mid-2011.

Caterpillar intends to locate its mining business headquarters in South Milwaukee, where Bucyrus headquarters is currently located, and maintain the Bucyrus brand for the principal Bucyrus legacy products.

Cat believes there are $400 million in annual synergies beginning in 2015 to be derived from combining the companies. The advantages include a broad, one-stop shop for global mining customers, using Cat engines and components to enhance performance and lower operating costs for Bucyrus equipment, purchasing and engineering cost efficiencies, and the deployment of manufacturing best practices for both brands.

The webcast discussing the deal will be posted at www.Cat.com/IRwebcast on Nov. 15.

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