| here is the story I sawPEORIA (Reuters) - Construction and mining equipment maker Caterpillar Inc. (NYSE:CAT - news) on Monday said it agreed to sell its new MT line of tractors to AGCO Corp. (NYSE:AG - news), a Duluth, Georgia-based agricultural equipment maker and distributor. |
Under the agreement, Caterpillar will be a components supplier to AGCO, which will acquire the rights to design, assemble and market the new MT Series of Caterpillar's Challenger farm tractors, said a Caterpillar spokeswoman.
Terms of the acquisition were not disclosed. Caterpillar said it will take an $80 million pretax charge in the fourth quarter for the deal, which is expected to close in the first quarter of 2002.
Excluding the charge, Caterpillar said it is comfortable with the 2001 outlook it gave along with its third-quarter results. The company forecast on Oct. 16 a drop in annual profits ranging from 10 percent to 15 percent.
Under Monday's deal, AGCO will immediately start assembling some Challenger tractors, acquire the MT Series product design and continue marketing the tractors through its own dealers and Caterpillar dealers worldwide.
Caterpillar will be a long-term supplier of diesel engines and other parts, and provide technical support to AGCO.
The sale will let Caterpillar focus its efforts on building engines and other parts and technology development, rather than assembly and marketing, said the company in a statement. AGCO is one of the biggest customers of Caterpillar's Perkins Engines division.
Shares of Caterpillar, which have gained 6 percent so far this year, ended Friday at $50.07 on the New York Stock Exchange (news - web sites), while those of AGCO ended at $15.70.