Columbus McKinnon (CMCO) to Combine with Kito Crosby Delivering Compelling Value Creation

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 Ratio^1,2 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.

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