Columbus McKinnon—a leading designer, manufacturer, and marketer of intelligent motion solutions for material handling—announced a definitive agreement under which it will acquire 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.
Kito Crosby is a 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 has delivered significant value creation, more than doubling revenue and quadrupling the number of employees while reducing injury rates and expanding into new product categories, end markets, and geographies.
Last year, 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.
As part of the deal, Columbus McKinnon has partnered with CD&R, a leading private investment firm with deep experience delivering growth and operational improvement in industrial and manufacturing companies. As a result of CD&R’s investment in Columbus McKinnon, Mike Lamach, Nate Sleeper, and Andrew Campelli are expected to join the company’s Board of Directors upon the closing of the deal.
The combined company will have an attractive financial profile, with meaningfully enhanced scale, better margins, and cash flow characteristics 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 EBITDA of $486 million, and an Adjusted EBITDA Margin of 23%, accelerating the achievement of the company’s fiscal year 2027 financial targets established at its 2022 Investor Day.
This deal is expected to be accretive to the company’s Adjusted Earnings Per Share in the first year after closing and grow over time as synergies are achieved. By year three, the company expects to achieve $70 million in annual net cost synergies.
This combined significant cashflow generation will enable the company to de-lever in the near term and expects to reduce its Net Leverage Ratio from about 4.8 times pro forma adjusted EBITDA post transaction closing to approximately 3 times within two years post-closing.
The company’s enhanced scale, margin profile, and free cash flow offer 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.
The deal has been unanimously approved by the Board of Directors of Columbus McKinnon. And Columbus McKinnon intends to fund the acquisition through a combination of committed debt financing of $3.05 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.
The initial debt financing structure offers flexibility for timely transaction execution, which is expected to be replaced with a permanent financing structure. The company also has a strong track record of quickly de-levering its balance sheet following prior acquisitions.
For Columbus McKinnon, J.P. Morgan Securities is acting as the financial advisor, and DLA Piper and Hogan Lovells US LLP are acting as legal advisors. And Evercore and Goldman Sachs are acting as financial advisors for Kito Crosby and KKR, while Kirkland & Ellis is acting as legal advisor. Debevoise & Plimpton is acting as legal advisor for CD&R, with Guggenheim Securities acting as its financial advisor.
KEY QUOTES:
“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. 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.”
– David Wilson, President and CEO of Columbus McKinnon
“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.”
– Robert Desel, Chief Executive Officer of Kito Crosby
“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.”
– Brandon Brahm, Partner at KKR
“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. 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.”
– Michael Lamach, Operating Advisor to CD&R funds and former Executive Chair and CEO of Trane Technologies
“We are excited about this business combination and look forward to welcoming Mike, Nate and Andrew to the Board. CD&R will bring deep industry knowledge, a strong results orientation and financial expertise to our already strong Board of Directors.”
– Jerry Colella, Chair of the Board for Columbus McKinnon
