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Caterpillar (CAT) Inks Strategic Alliance with Ritchie Bros.

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Mining giant, Caterpillar Inc. (CAT - Free Report) announced that it has entered into a strategic alliance with leading equipment distributor, Ritchie Bros. Auctioneers Incorporated (RBA - Free Report) . Per the alliance, Ritchie Bros. will become Caterpillar's preferred global partner for live onsite and online auctions for used Caterpillar equipment and also complement Caterpillar's existing dealer channels. This partnership is expected to deliver significant benefits to both companies.

Ritchie Bros. will provide Caterpillar and its dealers with access to proprietary auction platforms, software and other value-added services, thereby enhancing the exchange of information and services between customers, dealers and suppliers. This alliance will provide Caterpillar's used equipment buyers access to its leading products, digital offerings and world-class customer support through the Cat dealer network. Moreover, the deal will allow its independent dealers and their respective customers to continue with an accelerated delivery of Caterpillar's Internet of Things (IoT) connectivity offerings, to improve their fleet utilization.

On the other hand, the alliance will strengthen Ritchie Bros.’ association with Caterpillar's global independent dealers by providing them with better and continued access to a global auction marketplace for their used equipment. It will also help expand Ritchie Bros.’ global footprint.

Further, Ritchie Bros. inked an agreement to acquire IronPlanet. IronPlanet is a leading online marketplace for used heavy equipment and other durable asset sales, in which Caterpillar and its dealers own a minority position. The combined company will deliver a multi-channel marketplace to provide a full range of equipment asset management and disposition solutions.

The new strategic alliance between Ritchie Bros. and Caterpillar replaces and expands on existing agreements between Caterpillar, its dealers and IronPlanet. The alliance will become effective once Ritchie Bros. completes its acquisition of IronPlanet, which is subject to regulatory clearances and other customary closing conditions.

The alliance between Ritchie Bros. and Caterpillar will have an initial five-year term. After completion of the IronPlanet buyout, Ritchie Bros. will operate live onsite auctions at participating Caterpillar dealer locations under the Cat Auction Services brand and also include Ritchie Bros.' other onsite and online brands.

Caterpillar currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Astec Industries, Inc. (ASTE - Free Report) and Belden Inc. (BDC - Free Report) , both carrying a Zacks Rank #2 (Buy).

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