Here is Wall Street Journal coverage of the acquisition (may or may not be able to access):
http://online.wsj.com/article/SB1000142 ... 00050.html
- Caterpillar Inc. is pushing further into the rail business by buying a maker of locomotives, and taking on General Electric Co. in the process.
On Tuesday, the heavy-equipment maker said it would pay $820 million for Electro-Motive Diesel, in a bet that freight transport will grow as the economy strengthens.
Caterpillar, which with this deal has invested $2 billion since 2006 in the rail and transit sector, said its acquisition of Electro-Motive Diesel will make it the second largest locomotive and rail services provider in the U.S. behind GE. The investment adds a production component to Caterpillar's existing rail repair and service business.
"This acquisition represents the latest step in our strategic plan to aggressively grow our presence in the global rail industry," said Caterpillar Vice Chairman Doug Oberhelman, who takes over as chief executive of Caterpillar in July.
Electro-Motive, which was owned by Berkshire Partners LLC and Greenbriar Equity Group LLC, had sales of $1.8 billion in 2009. Berkshire and Greenbriar bought Electro-Motive Diesel from General Motors Corp. in 2005, paying $201 million.
In 2006, Caterpillar spent $800 million in cash and stock to buy Progress Rail Services, a railcar maintenance and repair business. Electro-Motive will become a unit of Progress Rail.
Earlier in the topic, I noted a reference to potential labor issues. To my best knowledge the United Auto Workers hold contracts on both the Caterpillar and EMD properties. While obviously there are differences regarding both rates of pay and working conditions between the two contracts, it is not a case of having a "non union" company merge with a "union'. Sort of related is the merger of Delta and Northwest Airlines. Many crafts on the former Delta property, including Flight Attendants, are non-union. On the Northwest side, "we're all Union". This one, especially to any of us here with Labor Relations on our CV's, will be fun to watch as it plays out.
Apparently, CAT wants to retain the identity of EMD rather than simply marketing locomotives under the CAT brand. However, one must wonder if prime movers will come painted 'any color you want so long as it is Mustard Yellow
Finally, I would hope that CAT's wide experience in export markets will open doors for more EMD exports; that of course translates to "more AMERICAN exports".