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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Bob Rudd who wrote (1002)	1/23/1999 2:06:00 AM
From: James Clarke	Respond to of 4691

I don't think its at all a longshot that CAT would buy one of the ag companies. I don't think it would be AGCO, though. What CAT needs is distribution. They have a fortress in construction equipment distribution, and they have some excellent high-end ag products. When you see these yellow tractors, they are dazzling. But farmers don't go to construction dealers. A big part of it is location. AGCO's weakness is its dealers. So I don't think this would fill CAT's needs. A CAT bid on Case would not surprise me, nor would a CAT bid on New Holland. Deere is probably untouchable because I have no doubt management would fight it - they hate CAT and they consider themselves special. For the other two, an acquisition is much more in the cards. Case - management just wants to make the last buck, whether they make it themselves, or get acquired. New Holland - Fiat owns the majority of the company, so that is CAT would be negotiating with. And I don't think FIAT sells for less than $25. With the stock at $12, that looks like a non-starter. But if I were CAT, and I thought the fit were right, I would pay something with a 2 in front of it for New Holland. JJC