John D. Boyd | Aug 03, 2010 2:49PM EDT
Equipment manufacturer Caterpillar said its Progress Rail Services unit completed the planned purchase of heavy locomotive builder Electro-Motive Diesel.
The purchase was for $820 million in cash, Caterpillar said, plus a “net working capital adjustment subject to post-closing finalization” that it estimates at about $108 million.
In a deal Caterpillar first announced on June 1, it purchased EMD from private equity fund owners Berkshire Partners and Greenbriar Equity Group, which had bought it in 2005 from General Motors.
Berkshire Partners is not related to Warren Buffett’s Berkshire Hathaway, which owns BNSF Railway.
Caterpillar Vice Chairman and CEO Doug Oberhelman said “the acquisition of EMD is a natural fit, as it supports our enterprise strategy to aggressively grow our Energy Power Systems business, and the rail industry is an important component.”
The company says EMD can also further boost Progress Rail, which is already a major supplier of rail and transit products and services including locomotive repairs and upgrades, railcar replacement and remanufacturing, track work, rail welding, signaling and maintenance of way equipment.
EMD and GE Transportation supply North American freight railroads with their powerful line-haul locomotives along with a number of smaller-powered yard units.
Neither has been selling many new locomotives on this continent in recent years after the freight recession led railroads to lay up hundreds of units from their fleets, but a major governmental push to inter-city passenger rail in the U.S. and overseas is offering new market opportunities for many rail equipment suppliers.
-- Contact John D. Boyd at jboyd@joc.com.
