Crosby to acquire Kito
Load handling and rigging equipment manufacturers US based Crosby and Japan’s Kito have signed a merger agreement to combine the two businesses.
The merger will be transacted by a cash tender offer by Crosby for all 21 million shares in Kito for ¥2,725 ($21) per share -a total of $442 million, which represents a premium of 64.3 percent over the closing price on Friday and a 61 percent premium over the three month average. While the transaction is technically an acquisition, there are extensive agreements laying out the merger process on the basis of a ‘merger of equals’.
It looks as though the company is likely to have early acceptances from a majority of the equity. If all goes according to plan the two companies will commence a ‘Squeeze Out’ process in January 20223 to forcibly obtain any outstanding shares.
The company statement said: “The combined company will be better resourced, and ultimately better positioned to serve customers, team members, and communities globally through additional investment in products, people, and facilities. The combination will further foster innovation and enable customers to benefit from a broader portfolio of products across a global landscape as well as increased levels of service, support, and training. Additionally, the parties’ geographically complementary operations have the potential to accelerate growth through an expanded and diversified geographic footprint.”
Crosby chief executive Robert Desel added: “This is an extraordinary opportunity to bring together two companies with differentiated, industry-leading capabilities, to create exceptional value for all stakeholders: team members, channel partners, end users, and communities. We have long respected Kito corporation as they exemplify our core values of safety, reliability, and innovation and are thrilled to combine with them to provide best-in-class products, solutions, and services for customers worldwide.”
“The strategic wisdom and industrial logic of this combination are compelling. It will pair the highly complementary product portfolios of The Crosby Group and Kito and allow customers access to a broad selection of lifting and material handling solutions from one trusted manufacturer. Together, the companies will be able to accelerate innovation through increased investment in new product development and enable end users to achieve higher levels of efficiency and safety through better technical, application, and training support from a combined business.”
Kito chief executive Yoshio Kito said: “We believe this combination delivers tremendous value for all stakeholders. We couldn’t have imagined a better partner and we are confident that this combined business will build upon its great brands to best serve our customers, team members, and communities. We will work together to develop and expand our product offerings, differentiate ourselves based on our customer first principle, and enhance our presence as a global leader.”
The Crosby group is owned by private equity firm KKR and includes a wide portfolio of brands and products, including Crosby, Gunnebo, Crosby Straightpoint, Crosby BlokCam, Crosby Airpes, Acco, McKissick, Crosby Feubo, Trawlex, Lebus, Speedbinder and CrosbyIP. Revenues are not disclosed but have been estimated at more than $270 million.
Founded in 1932, Kito had revenues for the year to the end of March of ¥62.5 billion ($483 million) with pre-tax profits of ¥6.4 billion ($49.6 million) products include overhead cranes, chain hoists and a range of fixed industrial cranes under the brands of Harrington, Peerless, Jiangyin, Erikkila, Van Leusden, Kito Weissenfels, SCC, and Fall Safe.
This is an interesting move and creates a mega company in the industrial handling and rigging market. Both companies are relatively decentralised operationally, and quite complex in terms of structure, so it is hard to imagine how the merger will actually proceed and provide any synergy benefits. Although there are bound to be some local merger opportunities while providing the group with a more extensive, but complimentary product range.
It looks as though the completion could be extended well into next year.