The company announced a similar $1.7 billion transaction in January. That deal was concluded in March.

Caterpillar has agreed to an immediate delivery of about 23 million shares based on current market prices.

The final number of shares to be repurchased and the aggregate cost per share to Caterpillar will be based on Caterpillar’s volume-weighted average stock price during the terms of the transactions, which are due to be completed in September.

In January, Caterpillar’s board authorised the repurchase of $10 billion of Caterpillar stock.

That approval expires on December 31 and, counting this deal, Caterpillar still has $5.8 billion worth of stock to buyback.

Caterpillar chairman and CEO Doug Oberhelman said the company had invested more than $30 billion in capital expenditure, research and development, acquisitions and other growth activities since 2008 to benefit customers.

“Delivering on our commitments to our stockholders is also a priority for our company,” he said.

“Repurchasing an additional $2.5 billion of Caterpillar stock in the third quarter of 2014 will bring our total 2014 stock repurchases to $4.2 billion.

“This, combined with the 17% increase in our quarterly dividend announced in June, clearly shows how we are taking advantage of our strong cash position to deliver superior returns to stockholders.”

Oberhelman said Caterpillar had returned $8 billion to stockholders through share buybacks and dividends since the beginning of 2013.