ERA primarily manufactures and sells underground equipment in mainland China through a subsidiary, Zhengzhou Siwei Mechanical & Electrical Equipment Manufacturing, commonly known as Siwei.

Siwei has a 600,000 square metre manufacturing base in Zhengzhou, Henan province, where it manufactures and sells roof support equipment. Its employees will be retained by Cat.

Cat officials said it had identified the mining industry and improving customer support as its key imperatives for its 2015 strategy.

“Our announcement today underscores Caterpillar's long-term commitment to continue to invest in China in order to support our growing base of Chinese customers,” Caterpillar group president Steve Wunning said.

“We intend to build on Siwei's strong reputation and relationships in China, further investing in its mining roof support business and operations, while utilizing Caterpillar's global reach and organization to help bring Siwei's products to more customers outside of China.”

ERA chairman Emory Williams said Cat had been an important contributor to equipment, safety and mining practice improvements globally.

Siwei chairman and chief executive officer Wang Fu, who will continue to head the company, added: “Caterpillar has developed a reputation for its community involvement and contributions to society in the communities where it operates and for the strong relationships it has with its employees.”

The two made a joint announcement of the pre-conditional voluntary officer for all ERA shares to be bought by Cat subsidiary Caterpillar (Luxembourg) Investment.

Caterpillar’s offer consists of two options, one including an all-cash alternative to acquire the shares for $HKD0.88 cash per share, and/or a loan note alternative, which will provide a minimum of $0.75 and up to $1.15 per loan note upon redemption.

ERA shareholders will elect to receive one or the other or a mix of the two.

The offer is subject to clearance from the Chinese Ministry of Commerce and other regulators.

“Caterpillar has a long history in China and, during the past three decades, Caterpillar has grown from a single sales office in Beijing to a cross-country footprint today – which includes 16 locations for manufacturing, four research and development facilities, three logistics and parts centers and other offices,” the company said.

“In addition, Caterpillar has made significant investments in China and announced a wide range of new facilities, with a total of nine new facilities under construction.”