- Business combination materially improves scale and product
scope, advancing Columbus McKinnon's strategy as the holistic
provider of intelligent motion solutions in materials handling
- Complementary portfolio enhances strategic positioning in
attractive verticals and target geographies, delivering an even
stronger portfolio of products
- Transaction valued at approximately $2.7
billion at a ~8x TTM Adjusted EBITDA multiple
post-synergies
- Expected to create ~$70 million
in annual net cost synergies, improving Adjusted EBITDA
Margins1 to greater than 23% and is expected to more
than double revenue and triple Adjusted EBITDA1 on a
pro-forma combined basis
- Significant combined cashflow generation expected to enable
de-leveraging to Net Leverage Ratio1 of approximately
3.0x within two years post-closing2
- The transaction is expected to be funded with $2.6 billion in committed debt financing and an
$0.8 billion perpetual convertible
preferred equity investment from CD&R
CHARLOTTE, N.C., Feb. 10,
2025 /PRNewswire/ -- Columbus McKinnon
Corporation (Nasdaq: CMCO) ("Columbus McKinnon" or the "Company"),
a leading designer, manufacturer and marketer of intelligent motion
solutions for material handling, today announced a definitive
agreement under which Columbus McKinnon will acquire Kito Crosby
Limited ("Kito Crosby") from funds managed by leading global
investment firm KKR in an all-cash transaction valued at
$2.7 billion subject to customary
post-closing purchase price adjustments. The Company expects the
deal to close later this calendar year, subject to regulatory
approvals and satisfactory completion of customary closing
conditions.
"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. We've long had
a great respect for Kito Crosby's strong portfolio of offerings.
The business that the Kito Crosby management team, led by
Robert Desel and Yoshio Kito have built is exceptional, and we
look forward to welcoming them to the Columbus McKinnon team," said
David Wilson, President and CEO of
Columbus McKinnon. "Through this strategic combination, we're
creating a company that is extremely well-positioned to deliver
real-world solutions for customers, with favorable tailwinds from
megatrends, including reshoring, infrastructure investment,
modernization of aging industrial facilities, and rising automation
needs due to labor 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."
Kito Crosby is a global leader in lifting solutions with
multiple manufacturing assembly plants and nearly 4,000 employees
serving over 50 countries. KKR has owned Kito Crosby since 2013 and
in the time had delivered significant value creation, more than
doubling revenue, quadrupling the number of employees while
reducing injury rates and expanding into new product categories,
end markets and geographies. In 2024, Kito Crosby generated
$1.1 billion in revenue through its
extensive global channel partner network. Together the combined
company will be a leader in material handling solutions with
greater scale and a strong presence in attractive verticals and
target geographies, delivering exceptional innovation and products
to customers.
"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," said Robert Desel, Chief Executive Officer of Kito
Crosby. "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."
"Today's announcement is a testament to the value we and the
Kito Crosby team have created by transforming the business through
organic initiatives, expanding global reach and pursuing strategic
and accretive acquisitions. Kito Crosby is now better able to serve
its customers with safety critical equipment than ever before, and
the combination with Columbus McKinnon will further position the
combined business to best serve all stakeholders. It has been
an honor to closely partner with Robert, Yoshio and the whole Kito
Crosby team and we believe the company is well positioned for this
new chapter," said Brandon Brahm,
Partner at KKR.
As part of the transaction, Columbus McKinnon has partnered with
CD&R, a leading private investment firm with deep experience
delivering growth and operational improvement in industrials and
manufacturing companies. As a result of CD&R's investment in
Columbus McKinnon it is expected that Mike
Lamach, Nate Sleeper and
Andrew Campelli will join the
Company's Board of Directors upon closing.
"We are excited to partner with Columbus McKinnon, their strong
management team and Board, to support this highly strategic
acquisition and the Company's long-term opportunities," said
Michael Lamach, Operating Advisor to
CD&R funds and former Executive Chair and CEO of Trane
Technologies. "We look forward to working closely with Columbus
McKinnon to realize the full potential of this combination and set
the stage for the Company's next phase of growth."
"We are excited about this business combination and look forward
to welcoming Mike, Nate and Andrew to the Board," added
Jerry Colella, Chair of the Board
for Columbus McKinnon. "CD&R will bring deep industry
knowledge, a strong results orientation and financial expertise to
our already strong Board of Directors."
Attractive Financial Profile to Drive Growth and
Deleveraging
The combined company will have a highly attractive financial
profile, with meaningfully enhanced scale, increased margins and
exceptional cash flow characteristics that are consistent with
best-in-class industrial product manufacturers. On a pro-forma
basis, the Company is expected to have annual revenue of
$2.1 billion, Adjusted
EBITDA1 of $486 million
and an Adjusted EBITDA Margin1 of 23%, accelerating the
achievement of the Company's fiscal year 2027 financial targets
established at its 2022 Investor Day. The transaction is expected
to be accretive to the Company's Adjusted Earnings Per
Share1 in the first year3 after closing and
grow over time as synergies are achieved. The Company expects to
achieve $70 million in annual net
cost synergies by year three.
The combined significant cashflow generation will enable the
Company to de-lever in the near-term and expects to reduce its Net
Leverage Ratio1,2 from approximately 4.8x pro forma
Adjusted EBITDA1 post transaction closing to
approximately 3.0x within two years post-closing. The
Company's enhanced scale, margin profile and free cash flow
provides a strong foundation to continue to return cash to
shareholders through its dividend, reinvest in long-term organic
growth and, over time, pursue additional acquisitions as it
continues to execute on its strategy of building the premier
intelligent motion solutions provider.
Transaction Details and Financing
The transaction has been unanimously approved by the Board of
Directors of Columbus McKinnon. Columbus McKinnon intends to fund
the acquisition through a combination of committed debt financing
of $3.050 billion from J.P. Morgan
including a $500 million revolving
credit facility and $0.8 billion of
perpetual convertible preferred equity investment from CD&R.
Terms of the CD&R investment include a 7% coupon, payable in
cash or payment-in-kind at Columbus McKinnon's option, and a
conversion price of $37.68, resulting
in CD&R as-converted ownership of approximately 40% of the
Company following completion of the transaction. CD&R has
agreed to a customary lock-up on its shares.
The initial debt financing structure provides flexibility for
timely execution of the transaction, which we expect to replace
with a permanent financing structure. The Company has a strong
track record of quickly de-levering its balance sheet following
prior acquisitions.
Advisors
For Columbus McKinnon, J.P. Morgan Securities LLC is acting as
the financial advisor, and DLA Piper LLP (US) and Hogan Lovells US
LLP are acting as legal advisors. Evercore and Goldman Sachs &
Co. LLC are acting as financial advisors for Kito Crosby and KKR,
while Kirkland & Ellis LLC is acting as legal advisor.
Debevoise & Plimpton LLP is acting as legal advisor for
CD&R, with Guggenheim Securities LLC acting as its financial
advisor.
1 Net Leverage Ratio, Adjusted EBITDA, Adjusted
EBITDA Margin, and Earnings Per Share are each a non-GAAP financial
measure. See the note regarding forward looking non-GAAP financial
measure at the end of this release.
2 Net Leverage Ratio is calculated in accordance with
the terms and conditions in the Company's credit agreement and is
defined as Net Debt over trailing-twelve month Adjusted EBITDA as
defined in the Company's credit agreement and in accordance with
the Company's previous filings with the Securities and Exchange
Commission.
3 Adjusted Earnings Per Share is calculated assuming
full run-rate annualized net synergies in the first year.
About Columbus McKinnon
Columbus McKinnon is a leading worldwide designer, manufacturer
and marketer of intelligent motion solutions that move the world
forward and improve lives by efficiently and ergonomically moving,
lifting, positioning, and securing materials. Key products include
hoists, crane components, precision conveyor systems, rigging
tools, light rail workstations, and digital power and motion
control systems. The Company is focused on commercial and
industrial applications that require the safety and quality
provided by its superior design and engineering know-how.
Comprehensive information on Columbus McKinnon is available at
www.cmco.com.
About Kito Crosby
Kito Crosby is the global leader of the lifting and securement
industry it pioneered, and for which it continues to set the
quality standard. With global engineering, manufacturing,
distribution, and operations, the company provides a broad range of
products and solutions for the most demanding applications. Kito
Crosby's people, products, solutions, and service have innovated
the lifting and securement industry for more than 250 years.
Together we lift and secure the world today, for a safer, stronger,
and more productive tomorrow. Our iconic brands include Kito,
Crosby, Harrington, Gunnebo Industries, and Peerless.
About CD&R
Founded in 1978, CD&R is a leading private investment firm
with a strategy of generating strong investment returns by building
more robust and sustainable businesses through the combination of
skilled investment experience and deep operating capabilities. In
partnership with the management teams of its portfolio companies,
CD&R takes a long-term view of value creation and emphasizes
positive stewardship and impact. The firm invests in businesses
that span a broad range of industries, including industrial,
healthcare, consumer, technology and financial services end
markets. CD&R is privately owned by its partners and has
offices in New York and
London. For more information,
please visit www.cdr.com and follow the firm's activities
through LinkedIn and @CDRBuilds on
X/Twitter.
About KKR
KKR is a leading global investment firm that offers alternative
asset management as well as capital markets and insurance
solutions. KKR aims to generate attractive investment returns by
following a patient and disciplined investment approach, employing
world-class people, and supporting growth in its portfolio
companies and communities. KKR sponsors investment funds that
invest in private equity, credit and real assets and has strategic
partners that manage hedge funds. KKR's insurance subsidiaries
offer retirement, life and reinsurance products under the
management of Global Atlantic Financial Group. References to KKR's
investments may include the activities of its sponsored funds and
insurance subsidiaries. For additional information about KKR &
Co. Inc. (NYSE: KKR), please visit KKR's website at www.kkr.com.
For additional information about Global Atlantic Financial Group,
please visit Global Atlantic Financial Group's website at
www.globalatlantic.com.
Analyst Conference Call
Columbus McKinnon will host a combined third quarter fiscal 2025
financial results and Kito Crosby acquisition conference call
Monday, February 10, 2025 at
5:00 PM Eastern Time to discuss the
transaction. The conference call and related presentation will be
accessible through live webcast on the Company's investor relations
website at investors.cmco.com. A replay of the webcast will also be
archived on the Company's investor relations website
through Monday, February 24, 2025.
Forward Looking Statements
This news release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are generally identified by
the use of forward-looking terminology, including the terms
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"illustrative," "intend," "likely," "may," "opportunity," "plan,"
"possible," "potential," "predict," "project," "shall," "should,"
"target," "will," "would" and, in each case, their negative or
other various or comparable terminology. All forward-looking
statements are subject to risks, uncertainties and other factors
that may cause the actual results, performance or achievements of
Columbus McKinnon and Kito Crosby to differ materially from any
results expressed or implied by such forward-looking statements.
Such factors include, among others, (1) the risk that the cost
synergies and any revenue synergies from the transaction may not be
fully realized or may take longer than anticipated to be realized,
(2) disruption to the parties' businesses as a result of the
announcement and pendency of the transaction, (3) the risk that the
integration of Kito Crosby's business and operations into Columbus
McKinnon will be materially delayed or will be more costly or
difficult than expected, or that Columbus McKinnon is otherwise
unable to successfully integrate Kito Crosby's businesses into its
own, including as a result of unexpected factors or events, (4) the
ability by each of Columbus McKinnon and Kito Crosby to obtain
required governmental approvals of the transaction on the timeline
expected, or at all, and the risk that such approvals may result in
the imposition of conditions that could adversely affect Columbus
McKinnon after the closing of the transaction or adversely affect
the expected benefits of the transaction, (5) reputational risk and
the reaction of each company's customers, suppliers, employees or
other business partners to the transaction, (6) the failure of the
closing conditions in the purchase agreement to be satisfied, or
any unexpected delay in closing the transaction or the occurrence
of any event, change or other circumstances that could give rise to
the termination of the purchase agreement, (7) the dilution caused
by the issuance of perpetual convertible preferred equity to
CD&R, (8) the possibility that the transaction may be more
expensive to complete than anticipated, including as a result of
unexpected factors or events, (9) risks related to management and
oversight of the expanded business and operations of Columbus
McKinnon following the transaction due to the increased size and
complexity of its business, (10) the outcome of any legal or
regulatory proceedings that may be currently pending or later
instituted against Columbus McKinnon before or after the
transaction, or against Kito Crosby, and (11) general competitive,
economic, political and market conditions and other factors that
may affect future results of Columbus McKinnon and Kito Crosby.
Forward-looking statements are not based on historical facts, but
instead represent our current expectations and assumptions
regarding our business, the economy and other future conditions,
and involve known and unknown risks, uncertainties and other
factors that could cause the actual results, performance or
achievements of the Company to differ materially from any future
results, performance or achievements expressed or implied by the
forward-looking statements. It is not possible to predict or
identify all such risks. These risks include, but are not limited
to, the risk factors that are described under the section titled
"Risk Factors" in our Annual Report on Form 10-K for the fiscal
year ended March 31, 2024 as well as
in our other filings with the Securities and Exchange Commission,
which are available on its website at www.sec.gov. Given these
uncertainties, you should not place undue reliance on these
forward-looking statements. Forward-looking statements speak only
as of the date they are made. Columbus McKinnon undertakes no duty
to update publicly any such forward-looking statement, whether as a
result of new information, future events or otherwise, except as
may be required by applicable law, regulation or other competent
legal authority.
Forward Looking Non-GAAP Financial Metrics
This press release presents forward looking statements regarding
non-GAAP Net Leverage Ratio, Adjusted EBITDA, Adjusted EBITDA
Margin, and Adjusted Earnings Per Share. The Company is unable to
present a quantitative reconciliation of these forward-looking
non-GAAP financial measures to their most directly comparable
forward-looking GAAP financial measures, net income, net income
margin, and earnings per share because such information is not
available, and management cannot reliably predict the necessary
components of such GAAP measures without unreasonable effort or
expense. In addition, the Company believes that such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors. The unavailable information
could have a significant impact on the Company's financial results.
These non-GAAP financial measures are preliminary estimates and are
subject to risks and uncertainties, including, among others,
changes in connection with post-closing adjustments. Any variation
between the Company's actual results and preliminary financial data
set forth above may be material. Such non-GAAP financial measures
should not be considered superior to, as a substitute for or
alternative to, and should be considered in conjunction with, the
GAAP financial measures. The non-GAAP financial measures in this
press release may differ from similarly titled measures used by
other companies.
Contacts
Kristine Moser
VP IR and Treasurer
Columbus McKinnon Corporation
704-322-2488
kristy.moser@cmco.com
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