The 4,000 global employees of Kito Crosby, a Texas-headquartered manufacturer and distributor of shackles, chains, hooks and other industrial lifting and safety products, will receive checks worth up to 12 months of income following the company’s all-cash sale to its Charlotte-based competitor, Columbus McKinnon.
Employees who have been at Kito Crosby for at least three years will receive six months worth of income payments, according to KKR’s Pete Stavros. Longer-tenured ones will earn as much as 12 months of income. Some of Kito Crosby’s employees are unionized under the International Brotherhood of Teamsters.
“Too often I hear people say that [employee] ownership and unions don’t mix and this is one of many examples proving that isn’t the case,” said Stavros, who sees the country’s unionized workforce as an opportunity to expand employee ownership. “Almost half our workforce in the US is union.”
Worker share
KKR acquired Kito Crosby (previously The Crosby Group) and its affiliates from Melrose Industries in 2013 in a billion-dollar transaction. The New York-based private equity investor launched an employee ownership program at the company in 2021. KKR expanded the program in 2023, when Crosby merged with Japanese lifting business Kito Corp. to form Kito Crosby.
“Through good times and challenging ones, our 4,000 team members in over 20 countries come to work everyday to make lifting and securement safer for millions of workers around the world,” Kito Crosby’s Robert Desel wrote on LinkedIn. “This week they learned the value they will receive for their share of what they built together.”
Value creation
During its 12 years of Kito Crosby’s ownership, KKR says it helped more than double the company’s profits and grow the firm to introduce new products and expand to new countries. Kito Crosby last year generated $1.1 billion in revenue.
The employee ownership exit “demonstrates that even with a more modest financial return workers can do well too,” said Stavros (see, “As private equity firms start to share the wealth, low-income workers get just a little bit”).
Stavros cited previous KKKR ownership exits like C.H.I. Overhead Doors’ $3 billion sale in 2022, in which around 800 workers received cash payouts averaging $175,000, a small portion of KKR’s 10x return. KKR’s $2.7 billion sale of Kito Crosby to Columbus McKinnon marks a 170% profit gain for the firm and its investors.
M&A
Columbus McKinnon says the proposition to the company’s board of directors for the acquisition of Kito Croby was approved unanimously. The company will finance the transaction using a $3 billion debt financing package from JP Morgan. It also secured an investment from New York-based investment firm CD&R to complete its offer to KKR.
“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 due to labor shortages,” said Columbus McKinnon’s David Wilson.
The combined entity, on a pro-forma basis, is expected to bring in $2.1 billion in annual revenue. It will use its combined cashflow to lower its debt obligations.
