Caterpillar feet to the fire after IRS raid

Caterpillar shares plunged 4.3 percent as the biggest maker of machinery for mining and construction had its Illinois offices raided by the IRS, the Federal Deposit Insurance Corp. and the Commerce Department.

The stock closed the day at $94.36, then shed a few morecents in extended trading. Caterpillar said it was cooperating with the government.

The raids come as Chief Executive Donald Umpleby shifts the global headquarters from Peoria to Chicago to bolster the machinery maker’s push in foreign markets. Last week, Douglas Oberhelman, the former CEO who remains as chairman, participated in discussions on progrowth policy at the White House, where President Trump said, “I love Caterpillar.”

Macquarie analyst Sameer Rathod said that, while the timing of the raid was a surprise, Caterpillar’s “transfer pricing accounting was under a microscope.”

Although the focus of the raids wasn’t clear, the company disclosed it received a subpoena requesting documents relating to financial information on Caterpillar subsidiaries.

The manufacturer said it got additional subpoenas requesting more information on the purchase and resale of replacement parts by Caterpillar and some of its subsidiaries and dividend distributions of certain non-US Caterpillar subsidiaries.

The company said it believes this matter “will not have a material adverse effect on the company’s consolidated results of operations, financial position or liquidity.”

A former Caterpillar executive accused the company in a 2009 whistleblower lawsuit of using offshore subsidiaries in Switzerland and Bermuda to avoid US taxes. The company settled that lawsuit in 2012.