Caterpillar to Acquire Bucyrus International
Posted by NotMike at 8:30 AM
Caterpillar, already the worlds largest vendor of mining equipment by total sales, is acquiring Bucyrus International for USD$8.6 billion. With interest rates so low, the majority of this purchase will be financed with debt, so dont worry about your shares in CAT being diluted too much by this transaction.
Whats most interesting about this acquisition is that shortly thereafter, stocks for a number of large companies in the mining and construction industries rose significantly. Looking at this from the perspective of a company that just opened a new facility in China, Caterpillar sees that China is moving to a larger, more centralized population in cities.
New cities mean new construction, and an increased demand for Caterpillar equipment. And, harmoniously, an increased demand for steel and raw materials, and thats where the insight in the mining purchase comes in. Caterpillar is poised to reap the benefits of the urbanization of China, and are already moving to be on-site for all of the projected expansion in mining and construction to take place in the decade to come.
