Summary
Caterpillar Inc. (CAT) announced a strategic agreement with AGCO Corporation (AGCO) on December 17, 2001, to transfer the design, assembly, and marketing of its next-generation Challenger® MT Series tractors to AGCO. This move allows Caterpillar to concentrate on its core strengths in engines, drivetrains, and technology development, areas where it can add the most value. AGCO, a significant player in agricultural equipment and a current customer of Caterpillar's engines, gains a strong entry into the broad-acre farm market with these innovative, high-horsepower tractors. Under the agreement, Caterpillar will continue to be a long-term supplier of high-horsepower diesel engines, drivetrains, and key components like the patented Mobil-tracTM system to AGCO. While financial terms are undisclosed, Caterpillar will record an approximate $80 million pre-tax charge related to this transaction. Despite this charge, Caterpillar affirmed its comfort with its previously issued 2001 financial outlook. The transaction is anticipated to close in the first quarter of 2002.
Key Highlights
- 1Caterpillar Inc. enters into an agreement with AGCO Corporation for the design, assembly, and marketing of the new Challenger® MT Series tractors.
- 2Caterpillar will focus on core competencies: engines, drivetrains, electronics, and technology development.
- 3AGCO will acquire the design of the MT Series tractors and will market them through both Caterpillar and selected AGCO dealers.
- 4Caterpillar will remain a long-term supplier of high-horsepower diesel engines (220-500 hp), drivetrains, and the Mobil-tracTM system to AGCO.
- 5AGCO gains access to the high-horsepower 'corporate' farm market segment with these advanced tractors.
- 6Caterpillar expects to incur an approximate $80 million pre-tax charge related to this transaction.
- 7The transaction is expected to close in the first quarter of 2002.