Summary
Caterpillar Inc. announced on May 16, 2006, its agreement to acquire Progress Rail Services, Inc. for approximately $1.0 billion, consisting of cash, stock, and assumption of debt. Progress Rail is a significant player in the North American railroad industry, specializing in remanufactured locomotive and railcar products and aftermarket services, with 2005 sales of $1.2 billion. This strategic acquisition aligns with Caterpillar's Vision 2020 strategy, aiming to expand its services portfolio and leverage its remanufacturing capabilities. The acquisition is expected to be accretive to Caterpillar's 2006 earnings per share and will add a new, diversified growth avenue within the transportation sector. Progress Rail's established network of over 90 facilities across the U.S., Canada, and Mexico, along with its experienced management team, are seen as key assets. Caterpillar intends to preserve Progress Rail's entrepreneurial nature and brand identity while integrating Caterpillar's global scale and technological expertise.
Key Highlights
- 1Caterpillar to acquire Progress Rail Services for approximately $1.0 billion ($800 million cash/stock and $200 million debt assumption).
- 2Progress Rail had 2005 sales of $1.2 billion and is a leading provider of aftermarket services to the North American railroad industry.
- 3Acquisition supports Caterpillar's Vision 2020 strategy, focusing on growth in services and leveraging remanufacturing capabilities.
- 4Transaction expected to be accretive to Caterpillar's 2006 earnings per share.
- 5Progress Rail operates over 90 facilities across the U.S., Canada, and Mexico with approximately 3,700 employees.
- 6Caterpillar plans to maintain Progress Rail's brand identity and entrepreneurial culture while integrating Caterpillar's global scale and technology.
- 7The acquisition is subject to regulatory approvals and expected to close around the end of Q2 2006.