Caterpillar to fully acquire Chinese joint venture

Caterpillar has announced its is to acquire XCMG's 15.87% stake in the two companies' Chinese excavator manufacturing joint venture, Caterpillar Xuzhou Limited (CXL). The terms of the deal, which is subject to Chinese regulatory approval, have not been disclosed.

Following the acquisition, CXL, will be fully owned by Caterpillar. The company says the move is part of its strategy to capitalise on the high growth rates of Asian markets.

Rich Lavin, Caterpillar's group president with responsibility for emerging markets said, "In the next few years we expect China to continue to invest heavily across the country in a wide range of infrastructure improvements, and it is critical for Caterpillar and its dealer network to continue investing in China to increase manufacturing operations, research and development, marketing and customer support for success in this growing market.

CXL was established as a joint venture between Caterpillar and XCMG in 1995. The move to a 100% Caterpillar subsidiary is part of a bigger project by the company to reorganise its worldwide excavator-manufacturing footprint.

The agreement on CXL coincided with ground breaking on a new Caterpillar plant in Xuzhou to manufacture large excavators and the opening of another facility to manufacture small and medium sized excavators. According to Caterpillar, once these projects are completed, it will have increased its excavator production capacity in China by +400%.