SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 11, 1997
CATERPILLAR INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-768
(Commission File Number)
37-0602744
(IRS Employer I.D. No.)
100 NE Adams Street, Peoria, Illinois
(Address of principal executive offices)
61629
(Zip Code)
Registrant's telephone number, including area code: (309) 675-1000
Item 5. Other Events
CATERPILLAR TO ACQUIRE PERKINS ENGINES DIVISION
FROM LUCASVARITY
$1.325 Billion Purchase Will Create A Global
Full-Line Producer of Reciprocating and Turbine Engines
Caterpillar Inc. has reached an agreement with LucasVarity plc to acquire
the assets of Perkins Engines, LucasVarity's diesel engine subsidiary,
for $1.325 billion. The addition of Perkins to Caterpillar's existing
engine business will create a global full-line producer of reciprocating
and turbine engines.
"The combination of Caterpillar and Perkins enhances our strategic
position in the worldwide engine business, ensures our ability to
leverage critical engine technologies for leadership in the future and
allows us to compete with other full-line producers," said Caterpillar
Chairman and Chief Executive Officer Donald V. Fites. "Caterpillar will
use its financial, technical and logistical strengths and resources to
accelerate Perkins' product growth through new offerings, new applications
and new technology. The excellent strategic fit between our companies
makes this a natural extension of our strategy to be a global leader
- -- and build value for our shareholders -- through select investments
in or near our core businesses."
"The on-highway and off-highway sectors of the diesel engine business
are converging, driven largely by progressive emissions legislation,"
said Victor A. Rice, LucasVarity's chief executive. "Perkins has a
limited on-highway presence, whereas Caterpillar is a full-line engine
producer and is committed to developing small- to medium-sized diesel
engines -- the size range produced by Perkins. Caterpillar is
exceptionally well-placed to take Perkins forward as a highly successful
engine producer well into the 21st Century."
The assets Caterpillar will acquire under the terms of the agreement
consist primarily of Perkins' facilities and operations in Peterborough,
Stafford, and Shrewsbury, England, and its stake in several international
alliances. The transaction is effective February 1, 1998, pending
approval of the sale by LucasVarity's shareholders and other necessary
approvals.
Caterpillar expects the impact of the acquisition on its earnings to be
essentially neutral in both 1998 and 1999, and positive beyond.
"Perkins' product line of 200 hp and smaller engines is an outstanding
complement to Caterpillar's engine business," said Richard L. Thompson,
Caterpillar group president. "The addition of those engines will
strengthen our offerings for sale to others and for powering our own
equipment. As a long-time customer of Perkins' engines, we know them
well. This is an established, profitable, well-managed company that has
earned the loyalty of its customers. All in all, we believe this is a
combination that benefits all concerned -- employees, customers and
shareholders alike."
Thompson noted that Caterpillar is Perkins' largest customer when sales
to F.G. Wilson (which Caterpillar owns jointly with Emerson Electric)
are included. In addition, Caterpillar's logistics division provides
parts distribution for Perkins.
"I'm extremely pleased with this combination, which will bring together
complementary technology and engine business expertise to enable Perkins
and Caterpillar to serve customers and grow in ways neither of us could
otherwise," said Michael J. Baunton, managing director for Perkins
Engines. "Caterpillar gives Perkins access to the financial, technical
and logistical strengths and resources it needs to continue growing and
improving. This will not only be good for the customers we serve, but
for our employees as well."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CATERPILLAR INC.
By: /s/ R. Rennie Atterbury III
R. Rennie Atterbury III
Vice President
Date: December 11, 1997
