Caterpillar offers US$ 885 million for ERA

By Helen Wright11 November 2011

Caterpillar

Caterpillar

Caterpillar has made an offer to acquire Chinese underground mining equipment manufacturer ERA Mining Machinery.

The deal, which values the Hong Kong-listed company at between HK$ 4.5 billion and HK$ 6.9 billion (US$ 577 million and US$ 885 million), would both deepen Caterpillar's footprint in China and further expand its presence in the mining equipment market.

Indeed, the news comes just months after Caterpillar completed its US$ 8.8 billion acquisition of mining equipment manufacturer Bucyrus in July.

ERA designs, manufactures, sells and supports underground coal mining equipment in mainland China through its subsidiary Zhengzhou Siwei Mechanical & Electrical Equipment Manufacturing, known as Siwei.

The company has a 600000 m2 factory in Zhengzhou, Henan province, where it manufactures and sells roof support equipment to underground mining customers in China.

Steve Wunning, Caterpillar group president with responsibility for resource industries, said the company would look to increase Siwei's reach outside of its domestic market.

"We intend to build on Siwei's strong reputation and relationships in China, further investing in its mining roof support business and operations, while utilising Caterpillar's global reach and organisation to help bring Siwei's products to more customers outside of China," he said.

The offer is subject to clearance from the Chinese Ministry of Commerce. Following completion of the deal, Caterpillar said that current Siwei chairman and CEO Wang Fu would continue to lead the operations of the business.

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