DIGGER maker Caterpillar is snapping up mining equipment group Bucyrus International for $7.6bn (£4.7bn) to cash in on the demand for minerals in tiger economies.
Caterpillar is buying Wisconsin-based Bucyrus to create a huge global supplier of trucks, hydraulic shovels, blasting drills and coal-mining equipment in a deal worth $8.6bn including $1bn of Bucyrus debt. The combined firms hope to cut costs by some $400m, starting in 2015.
The Illinois-based company is increasing its exposure to the minerals sector when rapid development in emerging markets like China and India is spurring demand for materials ranging from iron ore to coal.
Caterpillar already makes a wide range of mining equipment. Earlier this year it said it hoped to expand the line to meet demand from mining customers, who are scrambling to take advantage of rebounding prices for copper and other minerals.
The deal is the biggest in Caterpillar’s history and could help it to continue to boost its exposure to fast-growing emerging economies. Bucyrus generates about a third of its revenue in the developing world.
Caterpillar chief executive Doug Oberhelman said: “The mining segment for us is a key strategic area. Demand for minerals, for coal, for lots of things that come out of the ground will be increasing as urbanisation occurs.”