Columbus McKinnon, a leading designer, manufacturer, and marketer of intelligent motion solutions for material handling, recently announced a significant acquisition. The company has entered into a definitive agreement to acquire Kito Crosby from funds managed by KKR, a leading global investment firm, in an all-cash transaction valued at $2.7 billion. The deal is subject to customary post-closing purchase price adjustments and is expected to close later this year, pending regulatory approvals and the satisfactory completion of customary closing conditions.

Kito Crosby, a leader in lifting solutions, operates multiple manufacturing assembly plants and employs nearly 4,000 individuals serving over 50 countries. Since 2013, KKR has owned Kito Crosby and has significantly enhanced its value, more than doubling its revenue and quadrupling its workforce 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.

This acquisition positions Columbus McKinnon as a dominant player in the material handling solutions market, with an enhanced scale and a strong presence in attractive verticals and target geographies. The combined company will offer exceptional innovation and products to customers, leveraging the strengths of both entities. According to David Wilson, President and CEO of Columbus McKinnon, “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.”

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 Columbnx 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

Columbus McKinnon has also partnered with CD&R, a leading private investment firm with extensive experience in delivering growth and operational improvement in industrial and manufacturing companies. As a result of CD&R’s investment, Mike Lamach, Nate Sleeper, and Andrew Campelli are expected to join Columbus McKinnon’s Board of Directors upon the deal’s closing. Robert Desel, Chief Executive Officer of Kito Crosby, echoed the sentiment, stating, “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 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, CEO of Kino Technology Corporation

The combined company is expected to have an attractive financial profile, with enhanced scale, better margins, and cash flow characteristics consistent with best-in-class industrial product manufacturers. On a pro-forma basis, the company is projected to have annual revenue of $2.1 billion, adjusted EBITDA of $486 million, and an Adjusted EBITDA Margin of 23%. This deal is expected to be accretive to the company’s Adjusted Earnings Per Share in the first year after closing and is projected to grow over time as synergies are realized. By year three, the company anticipates achieving $70 million in annual net cost synergies.

This significant cash flow generation will enable the company to de-lever in the near term, expecting 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 returning cash to shareholders through dividends, reinvesting in long-term organic growth, and pursuing additional acquisitions as it executes 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. The acquisition is intended to be funded through a combination of committed debt financing of $3.05 billion from J.P. Morgan, including a $500 million revolving credit facility, and an $800 million 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 history of quickly de-levering its balance sheet following prior acquisitions.

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. For Kito Crosby and KKR, financial advisors include Evercore and Goldman Sachs, and legal advisor is Kirkland & Ellis. Debevoise & Plimpton is acting as legal advisor for CD&R, with Guggenheim Securities acting as its financial advisor. Brandon Brahm, a Partner at KKR, emphasized, “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.”

• “The forward-looking change and the expected synergies are dependent on market conditions. The scale of revenue increases the company routinely enjoys is an appreciable move towards ensuring adequate technology and operational expertise which promises a fit performance for the investors as well.”
• This acquisition is expected to align perfectly with the market dynamics in the US market seeing the increasing role of material handling sector in critical infrastructure and stabilization.

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

Expert Analysis: What This Means for the Industry

The material handling sector is experiencing a significant shift due to increasing automation and resilience-driven reshoring initiatives. According to a recent report by the Material Handling Equipment Association, the market for intelligent motion solutions is projected to grow by 15% annually over the next five years. This growth is fueled by the need for improved efficiency, safety, and operational uptime, especially in critical sectors such as manufacturing, logistics, and construction.

Combining the strengths of Columbus McKinnon and Kito Crosby creates a powerhouse that can better address these industry needs. The acquisition promises enhanced operational efficiencies, reduced injury rates, and a more comprehensive product portfolio that caters to a global market. This strategic move positions the company to leverage megatrends such as reshoring, infrastructure investment, and the modernization of aging industrial facilities.

Conclusion

The acquisition of Kito Crosby by Columbus McKinnon is set to transform the material handling solutions landscape. With a combined financial strength and expanded product portfolio, this deal promises increased efficiency, safety, and operational excellence. This strategic move is poised to deliver significant value to all stakeholders, including shareholders, employees, and customers. Regardless of the initial cost, the substantial return generated over the long haul for Columbus McKinnon promises to shore up many existing operations in papering a future that cannot be distorted as a USP.

As Michael Lamach, Operating Advisor to CD&R funds and former Executive Chair and CEO of Trane Technologies, noted, “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.”