(Caterpillar story updated with stock prices changes.)
NEW YORK (TheStreet) -- Caterpillar (CAT - Get Report) shares have edged lower Tuesday afternoon as analysts parse its hefty $8.6 billion offer for mining equipment peer Bucyrus (BUCY).

The companies' rival, Joy Global ( JOYG), was also in the red.

The stocks fell as overall market sentiment weakened Tuesday amid ongoing uncertainty about the global implications of a potential Chinese rate hike to reign in its inflation pressures and eurozone bailouts. The wide slump in mining stocks was especially pronounced, with coal producer Peabody Energy ( BTU - Get Report) falling 3.5% to $55.78 and Freeport-McMoRan Copper & Gold ( FCX - Get Report) slumping 4.6% to $97.36. BHP Billiton ( BHP) was falling 3.1% to $84.97. Crude oil and natural gas company Canadian Natural Resource ( CNQ - Get Report) was falling 3.4% to $37.87.
CAT

"We think Cat may be paying a hefty price for Bucyrus, especially since the company does not expect the full amount of the synergies to materialize before 2015," said Morningstar analyst Adam Fleck in an investor note.

Fleck estimates that the deal prices Bucyrus at about 16 times trailing earnings before interest, taxes, depreciation, and amortization (EBITDA) and nearly 2.5 times expected fiscal 2010 revenue. Caterpillar said it expects about $400 million in annual synergies from the combined companies, which lowers the multiple of EBITDA to about 9.2 times, said Fleck.

Comparatively, rival Joy Global recently traded for about 10 times trailing EBITDA and 2.2 times forward sales, he noted. With this comparison, Caterpillar's buyout offer looks hefty. Joy Global is Bucyrus's cross-town rival and the only major independent mining-equipment maker left in the U.S.

Still, Fleck expects increased long-term margin benefits of the acquisition to offset the hefty purchase price given that Bucyrus has generated wider operating profitability than Caterpillar's mining operations over the past two years and the company plans to fund most of the acquisition with low debt interest rate.

Longbow Securities analyst Eli Lustgarten told TheStreet on Monday that the deal is good for Caterpillar in the long term. However, Caterpillar's $92-per-share offer price exceeded his 12-month price target for Bucyrus of $90 a share.

On Monday, Caterpillar said it will acquire Bucyrus International in a deal worth about $8.6 billion including debt. Caterpillar said it is pursuing the deal as part of its plan to increase its clout in the mining equipment industry.

Under the deal, Bucyrus shareholders will receive $92 a share, or $7.6 billion in cash. This represents about a 32% premium to Bucyrus' closing share price of $69.62 last Friday. Caterpillar will also assume Bucyrus' debt, pushing the value of the deal up to $8.6 billion.

Caterpillar stock was lower by 1.7% to $80.43, while Bucyrus shares were down 0.5% to $89.32 Tuesday afternoon. Joy Global ( JOYG) was slumping by 4% to $74.66.

-- Written by Andrea Tse in New York.

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