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Vancouver, British Columbia–(Marketwire – January 18, 2012) Acquisition Positions Finning to Provide Broad and Unmatched Support to Mining Customers. Finning International Inc. (TSX:FTT) and Caterpillar Inc. (NYSE:CAT) today announced the companies have reached an agreement for Finning to 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. After closing, Finning expects to begin providing sales, service and support for former Bucyrus mining products in all of Finning’s dealership territories.
The transaction is valued at approximately USD $465 million. Finning expects to fund the transaction primarily through the issuance of U.S. and Canadian dollar denominated term debt. The transaction is expected to be accretive to Finning’s 2012 earnings.
“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. Upon the close of this acquisition, Finning will be able to sell and support a comprehensive product line that meets our customers’ surface and underground mining equipment needs,” said Mike Waites, president and CEO of Finning International. “This acquisition provides an industry-leading product platform and sizeable Bucyrus machine population in our resource rich mining territories in South America and Canada. This acquisition adds new revenue opportunities and robust, long-term growth potential for our company and employees.”
“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. “Cat dealers have a proven track record helping customers realize the highest productivity and lowest owning and operating costs, and many mining customers have told us how important the dealers are to their success. Finning and Caterpillar have shared a longstanding relationship for close to 80 years, and we look forward to realizing the growth opportunities created by this agreement.”
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.
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. Caterpillar 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.
Finning will be filing a material change report (and related documents) in respect of this transaction.
Management will hold an investor conference call to discuss this transaction on Wednesday, January 18 at 11:00 a.m. Eastern Time. Dial-in numbers: 1-866-223-7781 (anywhere within Canada and the U.S.) or (416) 340-8018 (for participants dialing from Toronto and overseas).
The call will be webcast live and subsequently archived at www.finning.com. Playback recording will be available at 1-800-408-3053 from 1:00 pm Eastern Time on January 18 until January 25. The pass code to access the playback recording is 4463383 followed by the number sign.
Forward-Looking Disclaimer
This report contains statements about the proposed transaction between Finning International Inc. (Finning) and Caterpillar Inc. (Caterpillar) which are forward-looking rather than historical facts. A statement is forward-looking when it uses what we know and expect today to make a statement about the future. Forward-looking statements in this report include, but are not limited to, statements with respect to: the expected timetable for completion of the transaction, growth prospects for the former Bucyrus International (Bucyrus) business being acquired by Finning, the competitive advantages of the business being acquired, expected future financial and operating results, anticipated benefits and synergies of the transaction, the expected financing structure for the transaction and the expected impact of the transaction on Finning’s earnings. All such forward-looking statements are made pursuant to the ‘safe harbour’ provisions of applicable Canadian securities laws.
Unless otherwise indicated by us, forward-looking statements in this report describe our expectations at January 18, 2012.
Except as may be required by Canadian securities laws, we do not undertake any obligation to update or revise any forward looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from our expectations. As a result, we cannot guarantee that any forward-looking statement will materialize. Factors that could cause actual results or events to differ materially from those expressed in or implied by our forward-looking statements are discussed in Finning’s current Annual Information Form (AIF) in Section 4 and includes the additional risk that we may not be able to access required financing for the transaction on terms which are acceptable to Finning. We caution readers that the risks described in the AIF are not the only ones that could impact us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our business, financial condition, or results of operations.
Forward-Looking Statements
Certain statements in this press release relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to known and unknown factors that may cause Caterpillar’s actual results to be different from those expressed or implied in the forward-looking statements. Words such as “believe”, “estimate”, “will be”, “will”, “would”, “expect”, “anticipate”, “plan”, “project”, “intend”, “could”, “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance, and Caterpillar does not undertake to update its forward-looking statements.
It is important to note that Caterpillar’s actual results may differ materially from those described or implied in its forward-looking statements based on a number of factors, including, but not limited to: (i) global economic conditions and economic conditions in the industries and markets Caterpillar serves; (ii) government monetary or fiscal policies and government spending on infrastructure; (iii) commodity or component price increases and/or limited availability of raw materials and component products, including steel; (iv) Caterpillar’s and its customers’, dealers’ and suppliers’ ability to access and manage liquidity; (v) political and economic risks associated with our global operations, including changes in laws, regulations or government policies, currency restrictions, restrictions on repatriation of earnings, burdensome tariffs or quotas, national and international conflict, including terrorist acts and political and economic instability or civil unrest in the countries in which Caterpillar operates; (vi) Caterpillar’s and Cat Financial’s ability to maintain their respective credit ratings, material increases in either company’s cost of borrowing or an inability of either company to access capital markets; (vii) financial condition and credit worthiness of Cat Financial’s customers; (viii) inability to realize expected benefits from acquisitions and divestitures, including the acquisition of Bucyrus International, Inc.; (ix) international trade and investment policies, such as import quotas, capital controls or tariffs; (x) the possibility that Caterpillar’s introduction of Tier 4 emissions compliant machines and engines is not successful; (xi) market acceptance of Caterpillar’s products and services; (xii) effects of changes in the competitive environment, which may include decreased market share, lack of acceptance of price increases, and/or negative changes to our geographic and product mix of sales; (xiii) union disputes or other employee relations issues; (xiv) Caterpillar’s ability to successfully implement the Caterpillar Production System or other productivity initiatives; (xv) adverse changes in sourcing practices of our dealers or original equipment manufacturers; (xvi) compliance costs associated with environmental laws and regulations; (xvii) alleged or actual violations of trade or anti-corruption laws and regulations; (xviii) additional tax expense or exposure; (xix) currency fluctuations, particularly increases and decreases in the U.S. dollar against other currencies; (xx) failure of Caterpillar or Cat Financial to comply with financial covenants in their respective credit facilities; (xxi) increased funding obligations under our pension plans; (xxii) significant legal proceedings, claims, lawsuits or investigations; (xxiii) imposition of operational restrictions or compliance requirements if carbon emissions legislation and/or regulations are adopted; (xxiv) changes in accounting standards or adoption of new accounting standards; (xxv) adverse effects of natural disasters; and (xxvi) other factors described in more detail under “Item 1A. Risk Factors” in Part I of our Form 10-K filed with the SEC on February 22, 2011 for the year ended December 31, 2010. This filing is available on our website at www.caterpillar.com/secfilings.
