MARKETS

Westrac to buy Cat's Chinese operations

WESTRAC China has entered into a deal to buy Caterpillar Global Mining's distribution and support...

Andrew Duffy

The deal is valued at about $US130 million and Seven Group Holdings, which owns Westrac, will fund the deal through a five-year debt facility.

Westrac said it estimated annual revenue from the new business to be $210-$250 million for the 2015 financial year.

After closing the deal it expects to start providing expanded sales, service and support for mining products in its Chinese territories.

The deal will see Westrac boost staffing by about 80 people, including 37 Caterpillar Global Mining Employees and contractors in China.

Subject to closing conditions and Chinese regulatory approval, the acquisition is expected to close by June 30.

“We are pleased to be building on and extending our partnership with Caterpillar,” Seven Group Holdings CEO Don Voelte said.

“The acquisition of the expanded mining product distribution and support business in our northeastern China markets will enhance our plans for development in the supply and service of heavy equipment to the mining and construction sectors.

Voelte said Caterpillar Global Mining, formerly known as Bucyrus International, had a product line that was a logical addition to Westrac’s current range of Cat products.

“As underground mining accounts for more than 80% of all coal production in China, the acquisition of this business will significantly increase the opportunities for WesTrac’s future growth in China,” he said.

“The expanded product range will enable WesTrac to deliver to mining customers a full suite of product and service solutions for the majority of their production needs.”

The expansion to the company’s Chinese operations comes on the back of significant job cuts at its Perth operations.

Last month, the company began the process of sacking over 400 employees from Perth and said the layoffs were necessary due to a downturn in the mining industry.

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