Caterpillar may sell part of logistics subsidiary

AP News
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Posted: Mar 23, 2011 3:47 PM
Caterpillar may sell part of logistics subsidiary

Heavy-equipment maker Caterpillar Inc. is considering selling off part of its logistics subsidiary, so it can focus on its core business.

Caterpillar said Wednesday that it has hired Bank of America Merrill Lynch and Robert W. Baird & Co. to help it evaluate the options for its third-party logistics business. The unit was created 24 years ago to market what Caterpillar had learned in its own parts-distribution business.

Caterpillar Vice President Steve Larson says the third-party logistics business has about 50 customers worldwide and has performed well, but it's not part of the Peoria, Ill., firm's main business of making yellow-and-black mining and construction equipment.

Caterpillar's third-party logistics unit has operations in North America, South America, Europe and Asia.

Spokesman Jim Dugan said many of the other companies Caterpillar's logistics unit serves are large multinational corporations. The unit's past clients have included Ford Motor Co., Daimler Chrysler, Harley-Davidson and Ericsson.

If Caterpillar does sell its third-party logistics unit, the company's own manufacturing logistics and parts distribution operations will not be included.

Caterpillar declined to release employment figures for its third-party logistics business, and Dugan said revenue figures for the unit were not immediately available Wednesday.

Caterpillar includes the results of its logistics unit as part of what the company calls its integrated service businesses, which accounted for about 40 percent of its $42.6 billion revenue in 2010. But those integrated service businesses include aftermarket parts, Cat Financial, Progress Rail services and several other units along with logistics.

Caterpillar had net income of $2.7 billion last year as machinery sales improved thanks to strong demand in developing nations.

Caterpillar said it expects to decide what to do with its third-party logistics unit by the end of 2011.

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Online:

Caterpillar Inc.: www.cat.com

Caterpillar Logistics: http://logistics.cat.com