Wells Fargo Comments On Caterpillar And Bucyrus Merger

In a report released today, Wells Fargo said that the Caterpillar, Inc.

and Bucyrus International, Inc.

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.