US-based material handling solutions firm Columbus McKinnon has agreed to acquire safe lifting and securement solutions provider Kito Crosby in an all-cash deal worth $2.7bn.
Kito Crosby, based in Texas, has multiple manufacturing assembly plants and nearly 4,000 employees serving over 50 countries.
Under investment firm KKR, the company has seen enhanced revenues and employee numbers, expansion into new product categories, markets, and geographies, and reduced injury rates.
Last year, Kito Crosby generated $1.1bn in revenue through its global partner network.
Under the terms of the agreement, Columbus McKinnon will acquire Kito Crosby from funds managed by KKR, which has held the company since 2013.
The board of directors of Columbus McKinnon unanimously approved the transaction.
The acquisition is expected to be completed later this year, subject to the satisfaction of certain customary closing conditions, including regulatory approvals.
As part of the transaction, Columbus McKinnon has partnered with CD&R, a private investment firm with deep experience in industrial and manufacturing companies.
Upon closing, Mike Lamach, Nate Sleeper and Andrew Campelli from CD&R will be appointed to Columbus McKinnon’s board of directors.
Columbus McKinnon president and CEO David Wilson said: “This is an important next step in further strengthening Columbus McKinnon’s position as a scaled, holistic provider of intelligent motion solutions in materials handling.
“Through this strategic combination, we’re creating a company that is extremely well-positioned to deliver real-world solutions for customers, with favourable tailwinds from megatrends, including reshoring, infrastructure investment, modernisation of ageing industrial facilities, and rising automation needs due to labour shortages.
“This combination also unites two highly talented teams with deep technical expertise, customer-centric cultures and a shared vision for operational excellence focused on safety, productivity and uptime on behalf of our customers.”
Columbus McKinnon intends to fund the acquisition through a combination of committed debt financing of $3.05bn from JP Morgan.
The debt financing includes a $500m revolving credit facility and $0.8bn of perpetual convertible preferred equity investment from CD&R.
CD&R’s investment includes a 7% coupon, payable in cash or payment-in-kind at Columbus McKinnon’s option, and a conversion price of $37.68.
In exchange, CD&R will get around 40% converted ownership of the combined company.
The combined company will provide material handling solutions with enhanced scale and a strong presence in key verticals and target geographies.
The combined company is expected to have $2.1bn in annual revenues, an adjusted EBITDA of $486m and an Adjusted EBITDA Margin of 23% on a proforma basis.
JP Morgan Securities served as the financial advisor, and DLA Piper (US) and Hogan Lovells US as legal advisors to Columbus McKinnon on the transaction.
Evercore and Goldman Sachs & Co. served as financial advisors, and Kirkland & Ellis as legal advisors to Kito Crosby and KKR.
Debevoise & Plimpton served as legal advisor, and Guggenheim Securities as a financial advisor to CD&R.
Kito Crosby CEO Robert Desel said: “We have long respected Columbus McKinnon. Our shared values of safety, quality, and a focus on our employees and customers will create value for all stakeholders.
“This deal brings together highly complementary, industry-leading brands, products and competencies with strong recurring sales dynamics.
“With the benefit of additional scale and shared best practices and technology, we will be better positioned to meet our customers’ needs than ever before, simultaneously creating new opportunities for growth and development for our team members. We could not be more pleased to see these two great teams coming together.”
