Caterpillar Inc. (>> Caterpillar Inc.) said it agreed to sell a distribution and support business in Peru to Ferreyros SAA (FERREYC1.VL) for about $75 million, allowing Caterpillar to continue to shed distribution units from recently acquired Bucyrus.
The deal includes inventory in Peru and 70 employees, who are expected to transition to Ferreyros.
Caterpillar--the world's sales leader in bulldozers, excavators and other earth-moving machinery--in July bought mining-equipment manufacturer Bucyrus for about $7.6 billion, and since then has made a series of deals to sell off portions of Bucyrus's distribution businesses. Cat has said its long-held strategy has been for its dealers to service and sell all its products. Since Bucyrus used a direct model to sell and support products, Cat said it would transition that distribution and support system to dealers.
"Our agreement with Ferreyros marks the next step in our journey to transition product distribution and support of former Bucyrus machinery to Cat dealers around the world," Steve Wunning, Caterpillar group president, said. "We're making good progress on our journey."
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.
Earlier this month, Seven Group Holdings Ltd. (>> Seven Group Holdings Ltd) said its WesTrac heavy machinery unit agreed to buy Bucyrus distribution and support businesses from Caterpillar in several parts of Australia for about $400 million. In January, Finning International Inc. (FINGF, FTT.T) said it has agreed to buy part of the Bucyrus distribution business for about $465 million. In December, Cat said the industrial division of Sime Darby Bhd (4197.KU) acquired a portion of Bucyrus's distribution business in Australia, Papua New Guinea and New Caledonia for about $360 million.
In January, Caterpillar said its fourth-quarter earnings jumped and the company predicted that demand for its construction and mining equipment will remain strong this year despite the slow recovery in construction in the U.S. and Europe.
Shares were up 1.1% to $107.06.
-By Ben Fox Rubin, Dow Jones Newswires; 212-416-3108; [email protected]