Cat, MWM--Cat To Buy MWM

Two days after announcing a 96% increase in third quarter profit, Caterpillar Inc. put some of that money to work announcing it has signed an agreement to acquire German engine manufacturer MWM Holding GmbH. Cat bought MWM, in an all cash deal, from the private equity investment company 3i, headquartered in London. The total transaction value is € 580 million ($810 million), Cat said. MWM has 1100 employees worldwide and 11 subsidiary companies.

The acquisition of 135-year old MWM, (Motoren-Werke Mannheim ) which was sold to 3i by Deutz AG in September, 2007 for € 360 million, ($500 million) will significantly increase its options for sustainable power generation solutions, Caterpillar said.

"MWM is recognized for its leading technology and product strength, particularly for its highly efficient range of engines, combined heat and power and trigeneration solutions capable of operating on a wide range of gaseous fuels including natural gas, biogas, mine gas and industrial waste gas," said Caterpillar CEO Doug Oberhelman. "This is a natural complement to Caterpillar's existing diesel and gas power generation business and demonstrates our commitment to continued investment in sustainable products and industries," Oberhelman added.

Some might paint this as a reaction to GE’s recent acquisition of Dresser Inc., which includes the Waukesha range of natural gas engines. Not so, Cat said, noting it made the offer for MWM this summer, after being a serious contender for MWM in 2007 as well.

Cat, as has been well chronicled, has been extremely aggressive in acquisitions and investments for growth this year, including its $820 million acquisition of EMD in June, almost the same as it paid for MWM.

MWM will become part of Caterpillar's Electric Power Division (EPD), which supplies natural gas and diesel generator sets and integrated power systems involved in the generation, control and supply of electricity.

Cat said the integration of MWM will result in “important synergies leveraging the two companies' existing product ranges, advanced engine technologies, research and development resources, manufacturing, distribution and customer support capabilities.”

"The gas engines industry is a great fit for Caterpillar's energy and electric power systems business. Together with the two companies' premium products, technology and global distribution network, our comprehensive offerings will deliver sustainable power system solutions for our global customers," said Bill Rohner, Caterpillar vice president with responsibility for Electric Power. The acquisition is expected to close in the coming months, pending final regulatory approvals.

Source: Diesel Progress Online