Codan finally sells Minetec to Caterpillar for $14 million after three year collaboration
Back in February 2018, Caterpillar and Codan Ltd-owned Minetec, announced an agreement for the development and delivery of technologies targeting underground hard rock mining challenges with the integrated solutions to be offered as part of Cat® MineStar™. The third party collaboration brought Cat greater underground positioning capabilities and an underground tracking network with a high speed data channel on top of it. Fast forward to today and the relationship has culminated in Codan agreeing to sell 100% of Minetec to Caterpillar for $14 million.
Following completion, Codan will provide manufacturing services to Caterpillar for up to five years, to ensure a successful transition and continuous supply to Caterpillar customers. The sale is subject to a number of conditions typical for transactions of this nature and is expected to complete in July 2021. Minetec provides unique high–precision tracking, productivity and safety solutions for underground hard–rock mines. Minetec’s technology enables real–time monitoring and control of mining operations, allowing miners to visualise the whole mine in order to optimise productivity and enhance safety.
The statement said: “In February 2018, Minetec entered into a master development and marketing agreement with Caterpillar Inc. Since the inception of the agreement, Minetec’s technology has been integrated into the Caterpillar Inc Minestar® for underground solution and has been made available to customers through the Caterpillar Inc global dealer network. Under Codan’s ownership, the Minetec business has not scaled to a level that supports the ongoing investment required for a technology–based business. As a result, the Board undertook a strategic review of the business. While the technology developed by Minetec is world class, the Board concluded that Codan was not the best owner and therefore the decision was made to sell the business to Caterpillar.”
Codan’s Managing Director, Donald McGurk, said: “As we evaluated our strategic options, we concluded that the best outcome for Minetec to achieve its potential was to discuss the transfer of the business to Caterpillar, this being seen as a logical progression following the partnership agreement put in place in 2018. We believe that Caterpillar is the more appropriate owner, as they continue to be the market leading supplier to the mining industry, with an extensive global dealer network covering 172 dealers across 190 countries. Caterpillar embraced this thinking, leading to today’s announcement. In particular, Caterpillar saw the benefits of an integrated business under their ownership.”
Based on the expected $14 million sale price, this will result in a one–off gain before tax in the order of A$3 million for Codan. The funds received by Codan from the sale will be used to pay down its loan facility, following Codan’s recently announced acquisitions. The sale of Minetec will allow Codan to focus on continuing to grow its core businesses and, in particular, maximise the performance of the recently announced acquisitions of Domo Tactical Communications and Zetron. Codan said it would like to “thank all Minetec employees for their contribution over the past nine years and look forward to working closely with Caterpillar in order to maximise the performance of the Minetec business to ensure both Codan and Caterpillar benefit from its ongoing relationship.”
