Caterpillar, Inc was founded in 1925. Headquartered in Peoria, Illinois, the
company manufactures construction and mining equipment, diesel and natural
gas engines, and industrial gas turbines. The company operates in three primary
lines of business: machinery, engines, and financial products. The machinery line
of business designs, manufactures, markets, and sells construction, mining, and
such as track and wheel tractors, track and wheel loaders,
pipelayers, motor graders, wheel tractor-scrapers, track and wheel excavators,
backhoe loaders, log skidders, log loaders, offhighway trucks, articulated trucks,
paving products, telescopic handlers, skid steer loaders, and related parts. It also
offers logistics services for other companies.
The engines business line designs, manufactures, markets, and sells engines for
the company’s machinery; electric power generation systems; on-highway
vehicles and locomotives; marine, petroleum, construction, industrial, agricultural,
and other applications; and related parts.
The financial products line of business includes provision of various financing
alternatives to customers and dealers for the company’s machinery and engines,
and solar gas turbines, as well as other equipment and marine vessels. It also
offers various forms of insurance to customers and dealers to support the
purchase and lease of Caterpillar’s equipment; and invests in independent power
projects using the company’s power generation equipment and services.
Caterpillar markets its products through various distribution centers and dealers
Your task is to evaluation the possibility of a divestiture of caterpillar’s finance
division. You should base your analysis on the Summary Statistics and the
excerpts from Caterpillar’s Financial Statements shown on the following pages.
Please try to answer the following questions:
Show, with a diagram, your recommended method of divesting the division
What assets would go with the new company?
Estimate the new division’s value.