Consideration is roughly US$14 million, inclusive of working capital, and a volume-based earn-out over the next five years.
Following completion, Codan will provide manufacturing services to Caterpillar for up to five years, to ensure a successful transition and continuous supply to Caterpillar customers.
Minetec provides unique high-precision tracking, productivity and safety solutions for underground hard rock mines, which enables real-time monitoring and control of mining operations.
In February 2018, Minetec entered into a master development and marketing agreement with Caterpillar, with the technology being integrated into Cat's Minestar system since then.
Under Codan's ownership, the Minetec business has not scaled to a level that supports the ongoing investment required for a technology based business.
Following a strategic review, the board of Codan concluded Caterpillar was a better owner.
"We believe that Caterpillar is the more appropriate owner, as they continue to be the market leading supplier to the mining industry, with an extensive global dealer network covering 172 dealers across 190 countries," Codan managing director Donald McGurk said.
"Caterpillar embraced this thinking, leading to today's announcement. In particular, Caterpillar saw the benefits of an integrated business under their ownership."
Codan expects to realise a one-off gain before tax of about A$3 million.
The sale is expected to be finalised next month.
Shares in Codan closed at $18.30 yesterday, valuing the firm at $3.3 billion.