UPDATE 1-Caterpillar to buy Brazilian train component maker

Tag : Agriculture Machinery Component
Heavy machinery makerCaterpillar Inc (CAT.N: Quote , Profile , Research ) said on Tuesday it will buy Brazil's privately-held MGEEquipamentos & Servicos Ferroviarios Ltda, a maker of motorsand other components for locomotives and train cars.
Terms were not disclosed. MGE was founded in 1991 and has about 400employees.
The deal is part of Caterpillar's goal of expanding its ProgressRail Services division internationally, and marks the division'sfirst expansion outside the United States, Canada and Mexico,Caterpillar said.
"(Caterpillar) wants to expand their presence in rail servicesoutside the U.S., so they decided to establish an operation inBrazil and started to talk with us five months ago," said RonaldoMoriyama, MGE's general director, in a telephone interview.
A global boom in mining and farm production has spurred demand forbuilding up infrastructure in countries like Brazil, so producerscan more easily tap export markets.
"The industry is investing heavily in logistics for commoditiestransportation and passengers," Moriyama said.
Sao Paulo state will invest 16 billion reais ($10 billion) by 2010,and a rapid train link between Rio de Janeiro and Sao Paulo isbeing considered, he added.
Progress Rail has many 'used' locomotives in the United States thatcan be upgraded in Brazil with Caterpillar engines, then leased inSouth America, Moriyama said. While a new locomotive can bedelivered in about 14 months, upgrading a used one takes about 90days.