Fastbrick Robotics Ltd share price rockets on Caterpillar deal

The Fastbrick Robotics Ltd (ASX:FBR) share price has been a huge mover this morning. Here's why…

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One of the biggest movers on the market this morning has been the Fastbrick Robotics Ltd (ASX: FBR) share price.

In late morning trade the robotics company's shares are up 24% to 13 cents.

What happened?

Last week Fastbrick Robotics placed its shares into a trading halt as it finalised a placement of shares.

This morning the company revealed that the placement has been made with global construction and mining equipment manufacturer Caterpillar Inc.

The US$2 million placement has been made at 10 cents per share. Furthermore, Caterpillar will have the option of investing a further US$8 million at 20 cents per share in the future, should shareholders approve.

Whilst the placement is great news, it isn't the most important part of the release in my opinion.

As well as the placement, Fastbrick Robotics have entered into a memorandum of understanding (MOU) with Caterpillar to discuss and develop a potential framework for collaboration regarding the development, manufacturing, sales, and services of Fastbrick Robotics' robotic bricklaying technology.

According to the release, the MOU establishes a strategic alliance board with representatives from both companies. The board intends to develop the framework and consider how best to offer the technology to Caterpillar's construction customers.

The MOU has an initial 12-month term, which may be either extended by mutual written agreement or terminated by either party at any time.

Should you invest?

This is undoubtedly a big step forward for Fastbrick Robotics and I can't say I'm surprised to see its shares rocket higher.

As I've said before, I believe the company's bricklaying technology is very impressive and has the potential to disrupt the industry.

My only concern was commercialising it. But with a company like Caterpillar behind it, I feel Fastbrick Robotics is in a great position to make commercialisation a reality.

Whilst it might still be a touch soon for an investment for myself, those with a high tolerance for risk might want to consider it as a speculative buy.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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