19 December 1997

Caterpillar takes over VarityPerkins

US plant manufacturer Caterpillar has bought the diesel engine business of LucasVarity – VarityPerkins – for £803m.

The deal, subject to approval by LucasVarity shareholders and anti-trust authorities, is expected to be finalised early next year.

Unification of the Perkins and Caterpillar businesses would seem to make sense. Perkins majors in the production of engines for the agricultural, construction and marine markets, while Caterpillar offers a full line of engines both for on and off-highway use.

According to Victor Rice, chief executive of LucasVarity, it is the on-highway sector which presented the greatest problem for Perkins engines. "Following extensive analysis, we concluded it would have been very challenging to develop a major on-highway business by the time emissions legislation converge, and securing such a position through acquisitions is not economically viable," he says.

In the year ended Jan 31, 1997, Perkins sales totalled £655m with an operating profit before exceptional items of £59m. &#42