Finning International has reached an agreement with Caterpillar to acquire part of its distribution and support business functions for $465m.
The distribution and support business, which covers parts of South America, western Canada and the UK, was formerly operated by Bucyrus. Upon completion of the sale, Finning intends to begin providing sales, service and support for former Bucyrus mining products in all of Finning's dealership territories. The transaction is expected to be funded by US and Canadian dollar denominated term debt.
Finning International president and CEO Mike Waites said the acquisition provides an industry-leading product platform and sizeable Bucyrus machine population in the company's resource-rich mining territories. "This acquisition adds new revenue opportunities and robust, long-term growth potential for our company and employees," added Waites.
The acquired distribution and support business, which has current annual revenues of about $600m, 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 the closing of the acquisition.
The two-phase transaction is expected to close in Finning South America and Finning UK and Ireland in the first quarter of this year, followed by Canada in the second quarter.