UPDATE: Caterpillar To Sell Some Bucyrus Operations To WesTrac For $400 Million

MELBOURNE (Dow Jones)--Caterpillar Inc. (CAT) said Thursday it has struck a deal to sell the distribution business for its Bucyrus mining equipment in parts of Australia to Cat dealer WesTrac Pty. Ltd. for roughly US$400 million.

The agreement is expected to close by the end of June and will see some 430 employees and contractors transfer to WesTrac, the heavy equipment division of conglomerate Seven Group Holdings Ltd. (SVW.AU), Caterpillar said.

WesTrac separately estimated the sales and support businesses in Western Australia, Australian Capital Territory and New South Wales regions generate annual revenue of 600 million-650 million Australian dollars (US$622.5 million-US$674.4 million). It expects the acquisition to be neutral for earnings per share this financial year, but accretive thereafter, excluding the transaction costs.

Caterpillar finalized the US$7.6 billion purchase of Bucyrus International Inc. last year, and in January agreed to sell the distribution business for Bucyrus in South America, western Canada and the U.K. to Finning International Inc. (FTT.T) for US$465 million. A month earlier it had agreed to sell the distribution business in Australia's Queensland and Northern Territory, Papua New Guinea and New Caledonia to Sime Darby Bhd (4197.KU) for US$360 million.

WesTrac said it continues to discuss with Caterpillar the possible acquisition of Bucyrus distribution businesses in north eastern China, while the Illinois-based company said discussions also continue with other Cat dealers that have mining activity in their territories.

WesTrac is one of Caterpillar's top five dealers globally by sales value, and the sole authorized Cat dealer in three Australian territories and parts of China. It said the purchase of the Bucyrus businesses will be funded by a new five-year term loan.

"The Bucyrus product line and large installed base are a logical addition to our current range of Cat product, and will provide us with significant opportunities for future growth with our mining customers," said Jim Walker, chief executive of WesTrac.

Bucyrus produces a range of heavy mining equipment, including electric rope shovels, draglines, drills and trucks.

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com

--Ross Kelly in Sydney contributed to this article.

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