UPDATE 2-Caterpillar buys 3i’s engine maker MWM for $810 mln

* Buys Motoren-Werke Mannheim from 3i for 580 mln euros cash

* Caterpillar deal pre-empts wider auction -sources

* 3i enjoys 2.2 times return, readies other industrial exits

(Adds details, background, valuation, other planned 3i sales)

By Quentin Webb and Sakthi Prasad

LONDON, Oct 22 (BestGrowthStock) – Caterpillar Inc (CAT.N: ) agreed to
buy MWM Holding GmbH, the German maker of gas and diesel
engines, from British private equity firm 3i Group Plc (III.L: )
for about 580 million euros ($810 million) in cash.

Caterpillar’s rich offer pre-empted a formal auction that
was likely to have attracted a string of big strategic buyers,
two people familiar with the matter said.

The agreement hands Caterpillar, the world’s largest maker
of earth-moving equipment, a company it has long coveted, having
been out-bid by 3i three years ago, one of the people added.

It comes a day after Caterpillar’s Chief Financial Officer
Ed Rapp told Reuters the company was prepared to use part of its
$2.3 billion cash pile to strike more deals, after agreeing an
$820 million acquisition in August. [ID:nN21102022]

And it follows General Electric Co’s (GE.N: ) $3 billion
purchase earlier this month of Dresser Inc, a maker of gas
engines used in oil production and mining. [ID:nN06287898]

MWM, or Motoren-Werke Mannheim, will become part of the
Peoria, Illinois-based company’s Electric Power division.

MORE 3I SALES AHEAD

The sale gives 3i a return of 2.2 times its initial equity
investment just three years after it bought MWM, then known as
Deutz Power Systems.

One of the people said MWM had trailing earnings before
interest, tax, depreciation and amortisation (EBITDA) of about
40 million euros — meaning the deal was struck at a rich
enterprise value to historic EBITDA ratio of about 14.5 times.
Generac Holdings Inc (GNRC.N: ), the listed U.S. generator maker,
trades at 10.2 times historic EBITDA, Starmine data show.

The British buyout firm is gearing up to realise returns
from a string of industrial companies.

The Financial Times says it is preparing to sell Dutch
pump-maker Hyva. It also aims to float German joining products
firm Norma Group and is considering options for GES, the Spanish
builder of wind farms. [ID:nLDE6751GT] [ID:nLDE67U23L]

Credit Suisse advised 3i.
($1=.7186 euros)
(Reporting by Quentin Webb in London and Sakthi Prasad in
Bangalore; additional reporting by Philipp Halstrick in
Frankfurt; Editing by Greg Mahlich, Mike Nesbit)

UPDATE 2-Caterpillar buys 3i’s engine maker MWM for $810 mln