Rail and transit products and services provider Progress Rail, a wholly-owned subsidiary of construction and mining equipment maker Caterpillar Inc. (CAT), Tuesday said it has signed a definitive deal to acquire privately-held Electro-Motive Diesel for $820 million in cash from private equity firms Berkshire Partners LLC and Greenbriar Equity Group LLC.
Upon completion of the acquisition, diesel-electric locomotive manufacturer Electro-Motive will become a wholly-owned subsidiary of Progress Rail.
The transaction is anticipated to close by the end of 2010, pending final regulatory approvals. Progress Rail stated that Electro-Motive will remain headquartered in La Grange, Illinois, and John Hamilton will continue as Electro-Motive president and chief executive officer and will report to Billy Ainsworth, CEO of Progress Rail.
Commenting on the acquisition, Ainsworth said, "The acquisition of EMD will enable us to provide rail and transit customers an industry-leading range of locomotive, engine and emissions solutions, as well as unmatched aftermarket product and parts support and a full line of rail-related services and solutions."
Caterpillar Vice Chairman and Chief Executive Officer-Elect Doug Oberhelman said, "This acquisition represents the latest step in our strategic plan to aggressively grow our presence in the global rail industry."
Including today's announcement and its acquisition of Progress Rail, Caterpillar has invested nearly $2 billion since 2006 to grow its rail and transit businesses. "Rail has proven to be a highly efficient and sustainable method for moving freight and people, and we see a positive long-term future for the continued growth of the rail industry," added Oberhelman.
With revenues of $1.8 billion in 2009, Electro-Motive has a large installed base of diesel-electric locomotives and offers locomotive products in the rail and transit industry.
CAT is currently trading on the New York Stock Exchange at $60.00 per share, down $0.76 or 1.25%, on a volume of 317,117 shares. In the past 52-week period, the stock traded in a range of $30.01 to $72.83.
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