Caterpillar is selling a controlling stake in its logistics division to Platinum Equity, a mergers and acquisitions specialist, for $750m. Under the terms of the agreement, Platinum Equity will take a 65% stake in Caterpillar Logistics Services, the third party logistics division of Caterpillar's wholly-owned subsidiary Caterpillar Logistics. Caterpillar will keep a 35% share.
The proposed sale does not affect Caterpillar manufacturing logistics and transport operations and Cat brand parts distribution, which will continue as core businesses within Cat Logistics.
The transaction is expected to close in the third quarter of 2012.
"The sale of the third party logistics business would be a key step in the execution of our enterprise strategy," said Stu Levenick, Caterpillar group president with responsibility for Customer & Dealer Support. "This event enables Caterpillar to increase its focus on our core business that aligns with our strategic business model. We believe the transaction with Platinum will set the third party logistics business on a path for continued growth and success."
Caterpillar Logistics Services will continue to provide logistics services for non-Cat branded parts including FG Wilson, Perkins, Solar, as well as for Caterpillar Japan.
Jacob Kotzubei, a partner in Platinum Equity, said the investment is a perfect fit for the company, which has significant experience in executing carve-out transactions and operating logistics businesses.
"We have a lot of experience owning and operating businesses that provide complex supply-chain solutions," said Kotzubei. "We know what customers expect, and we share Cat Logistics' commitment to the highest levels of service and dependability."
Back in January this year Platinum bought Keen Transport Company, which includes Keen Transport and Cressler Trucking. Keen Transport is a US provider of heavy-haul logistics and transport services for the construction, mining, and agriculture equipment markets. Cressler Trucking is a general commodity carrier that provides packaged goods transport, primarily in the Northeast US.
Caterpillar, meanwhile, has announced plans for a multiyear expansion and enhancement of the Cat parts distribution network, which has added over 4m square-feet of capacity in new parts distribution centres in the US, Mexico and the United Arab Emirates. The company posted sales of more than $60 billion in 2011.