Wells Fargo Comments On Caterpillar And Bucyrus Merger
November 16, 2010 10:58 AM
In a report released today, Wells Fargo said that the Caterpillar, Inc. (NYSE: CAT) and Bucyrus International, Inc. (NASDAQ: BUCY) joint investor call reinforced management belief that (1) the deal is consistent with CAT's growth strategy outlined in the Q3 10 investor day and (2) the combined entity will be a stronger mining equipment market force due to product line breadth and distribution network strength.
“CAT management acknowledged it will likely have to digest its recent aggressive acquisition activity [and] indicated that there were no other bidders,” Wells Fargo writes. “We will wait until deal closure is closer to include expected impact.”
Despite occurring at a higher price than Wells Fargo would have preferred, the securities firm said that it believes the transaction appears to give CAT an additional lever to enable its 2012 $8-10 earnings milestone and puts the $55-60 billion revenue goal within reach.
Caterpillar currently trades at $81.67; Bucyrus trades at $89.61.
