Cat sells challenger ag tractors to agco: Cat dealers get full line of ag equipment, AGCO gets high end tractor line; production to continue at Dekalb,
Author: Diesel Progress North American Edition

For those wondering how Caterpillar Inc. was going to buy or develop its way into becoming a full line agricultural equipment supplier, the answer is now in. The Peoria, Ill., company is selling its way into the ag markets.

In a surprising announcement in the waning days of 2001, Caterpillar sold the design, assembly and marketing of its MT series Challenger ag tractors to AGCO, the Duluth, Ga., agricultural equipment manufacturer. Financial terms of the deal were not announced, though Cat took an $80 million pretax charge in the fourth quarter last year. The deal was expected to be concluded in the first quarter of this year.

The sale of the MT Challenger tractors was announced on December 17th and calls for AGCO to immediately begin assembly of the newly announced MT700 series of Challenger tractors. The first shipments are expected in March or April. Caterpillar retains the liability, service and parts for the first two generations of Challenger tractors and the sale includes only the newest generation of tractors. AGCO now also owns the Challenger name and future MT series tractors.

While AGCO said no formal supplier agreement was included in this deal, Cat will also be a major supplier to AGCO of diesel engines, drivetrains and other major vehicle components including the patented rubber-tracked Mobil-trac system used in soil compaction sensitive applications. AGCO is already a major user of Perkins diesels.