Seven Group: WesTrac to Buy Caterpillar Assets in China for US$130 Million

   By Rhiannon Hoyle 
 

SYDNEY--Seven Group Holdings Ltd. (SVW.AU) said it will buy Caterpillar Inc.'s (CAT) mining-product distribution and support business in northeastern China in a deal worth US$130 million.

The acquisition will give Seven Group's heavy-machinery unit WesTrac China Ltd. the right to sell Caterpillar mining products in the country's northeast provinces as well as support services and maintenance, the company said Tuesday.

"China produces almost half of the world's coal, with a forecast to grow, [so] there is a tremendous opportunity for both Caterpillar and WesTrac to partner and grow alongside our mining customers in that country," said Steve Wunning, a Caterpillar group president. Caterpillar produces mining equipment like dump trucks and excavators.

Seven Group Chief Executive Don Voelte said the acquisition would "significantly increase the opportunities for WesTrac's future growth in China."

The deal, which is expected to be finalized by the end of June, will be funded through a new five-year debt facility, Seven Group said.

"The acquisition is expected to be largely earnings per share neutral for the remainder of the financial year ending June 30, 2014, and accretive thereafter," Seven Group said in the statement. It forecast revenue of US$210 million-US$250 million from the business in the fiscal year through June 2015.

Write to Rhiannon Hoyle at [e-mail]

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